Cloud build out to drive server sales for years, says Intel

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Cloud build out to drive server sales for years, says Intel

Microscope contributor

Intel squeezed out a bumper set of fourth quarter financials last night and declared that the corporate refresh has plenty of legs left yet with the cloud and Windows 7 expected to drive PC and server sales.

The industry bellwether pushed up sales 8% to $11.5bn as profits grew 48% to $3.4bn for the quarter ended 25 December.

The Data Centre Group was "one of the notable standout performers" said Intel CEO Paul Ottelini, in a nod to the 25% revenue growth in the unit, with processor sales up nearly 30% and chipsets up more than 10%.

"Demand was strong in the enterprise market, specifically for servers," he said.

The PC refresh in the corporate market was feeding through to shipments, albeit relatively more modest, with sales in the PC Client Group up 3.2% as CPUs rose 8.6% but chipsets and Atom fell 10%.

Ottelini admitted it was hard to pinpoint the exact stage of the corporate refresh but asserted "we're not halfway yet. There is a whole bunch of people that have not upgraded to Windows 7 and that intend to."

However, he set expectations for stronger growth this year in the newer economies. "We look for consumers and particularly in emerging markets continuing to be the driver of that part of the business [in notebooks]."

The chip giant's CFO Stacey Smith said cloud providers building infrastructure had already generated one third on unit growth from 2009 to 2010 and that sales pattern would continue.

"I think there is a secular trend here in terms of the build out of the cloud infrastructure and while that's still a relatively small percentage of our total server business, it's growing exceptionally fast.

"That's a trend that I think carries forward into the future. The information moves to the cloud, all these devices compute and connect. I think that continues to drive server results for a number of years," said Smith.

Intel plans to refresh the "entire Xeon server product line-up in the first half of 2011.

For the year, sales grew 24% to $43.6bn and profits grew to $11.7bn, up 167%.

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