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The PC industry is not seeing a recovery soon. IDC's recent quarterly PC shipment report saw global PC shipments fall 11.4% over the year to 75.6 million units driven by the increased adoption of tablet devices. Besides PC vendors, the trend has also forced chip manufacturers like Intel (NASDAQ:INTC) to diversify their operations.

Intel's Financials
In the recently ended second quarter, Intel saw revenues fall 5% over the year to $12.8 billion, shy of the market's expectations of $12.88 billion. EPS of $0.39 was in line with the market's projections for the quarter.

By segment, PC Client Group revenues fell 7.5% over the year to $8.1 billion. Revenues from their Data Center group were flat over the year at $2.7 billion while their Architecture group saw revenues fall 15% over the year to $0.94 billion.

Going forward, Intel expects revenues of $13-$14 billion for the quarter, compared with the Street's projections of $13.73 billion. It scaled back revenue expectations for the year as well, projecting revenues to remain flat over the year.

Intel Catching up on Mobile
Intel is racing to get back in the lead within the mobile computing segment. Earlier this summer, it announced the newest version of their Atom architecture, Silvermont, to deliver faster processing speeds while maximizing power consumption. Within the flagship Core processors, it released Haswell, the first fan-less Core processor to power ultrabook devices. Haswell is now being used to power Samsung's Galaxy III tablets, Google's Chromebook and even Apple's 13 inch MacBook Air.

Over the past years, Intel lost its mobile dominance to ARM, which has managed to deliver faster, smaller chips that are highly in-demand for smartphones and mobile computing devices. But Intel plans to counter that with its latest product launches. It is investing in the development of 14-nanometer architecture, expected to be delivered next year. This will be a significant improvement over the 22-nanometer chips it is currently offering. The biggest news though was last week's release of chipset, Bay Trail. The new chipsets offer improved tablet performance and battery life and will be made available for both consumer and business computers by the end of this year. Bay Trail boasts of a powerful imaging engine to deliver better graphics and an improved battery lifetime.

Bay Trail will not only help Intel compete with ARM on account of its processing capabilities, but pricing will be a big factor as well. A few years ago, I had mentioned how growth in this decade will be about price wars and mobile computing. After focusing on high-end products, Intel seems to have come around to face the present market conditions of supplying low-cost chipsets. Market reports suggest that Bay Trail for tablets will be priced at $10 and for notebooks at $20 a chipset. Intel has been selling its Atom processor for $25-$30 each. Low-priced superior products will help Intel capture the growing market of mobile and smartphone computing in the cost conscious emerging markets of Asia and Latin America.

Additionally, Intel continues to work on the development of smaller, more cost and power efficient chips that will help power the newer models of mobile devices expected to be made available during this year's holiday season. In fact, according to Intel's management, it is actively pursuing plans to deliver a less than $100 tablet for the season. Low-end tablets come with very limited features and are geared to cater to the emerging markets. Such machines are yet to be accepted by the developed nations. But Intel believes that it will be able to change that.

Intel is also gearing to address the upcoming trend of wearable technology. Recently, Samsung released its first wearable device, the Galaxy Gear. Earlier this month, Intel also displayed a wearable, "clunky" bracelet that will be powered by another upcoming chip series, Intel Quark. Quark chips are expected to ship next year and will be five times smaller and 10 times faster than their Atom chips.

Intel's TV Service

Meanwhile, Intel is also looking at diversifying its portfolio. It continues to look into plans for offering its own internet TV service, rumored to be called OnCue. The TV offering is currently in its testing phase and is expected to be introduced in select U.S. markets later this year. Intel has not disclosed details about the service, but analysts expect that given Intel's capabilities, the service should offer one of the best recording services through an improved DVR box and an improved interface. I find this to be a confusing and weird strategy to say the least.

Intel's stock is trading at $23.77 with market capitalization of $118.43 billion. It touched a high of $25.98 in June this year. For what reason? I have no idea. At present, I am quite bearish on Intel's outlook.

Source: Intel's Confusing Strategy