Intel: Our PC success does not depend on 'XP effect'

Chip maker insists its PC group will continue to grow long after XP refresh bonanza dies down

Intel has brushed off the "XP effect" as just a small factor contributing to its booming PC Client Group, insisting it is well placed to thrive once the refresh push comes to an end.

Since Microsoft axed support for the 12-year-old operating system in April, the PC market has seen something of a revival as companies were forced to upgrade to newer versions.

Intel admitted the so-called XP effect has given its PC Client Group a small boost, but insisted it was just a bonus on top of an otherwise successful business.

On a Business Client Computing update webcast, PC Client Group vice president Tom Garrison said the XP boom is at best a short-term boost.

"If you think the near-term strength we're seeing today is being driven disproportionately by Windows XP then at some point, when you have transitioned the market off XP, you would expect to see a slowdown," he said.

In Q2, Intel's revenue jumped eight per cent annually to $13.8bn (£8.21bn) driven by strong performance in its PC Client Group, which saw sales grow six per cent to $8.7bn over the same period.

Garrison said there are a number of other underlying factors driving the growth aside from XP's end of support.

"We went back and looked at our large, medium-sized and small businesses' total available market (TAM) and charted that relative to GDP," he said.

"As GDP declines, our TAM declines... it is a solid correlation. In 2011 there was a divergence – GDP fell and large, medium and small businesses' TAM had a significant decrease. But now we're in 2014 it has started to recover back to an area we would have expected."

He added that a demand for businesses to hire more staff will also stand the PC Client business in good stead for future growth.

"Large enterprises are recovering from a hiring perspective, but SMBs are still behind," he said. "We still think there is an upside from a hiring perspective though – as businesses hire, they will have a need for [PC] clients in those businesses."

He insisted the recruitment trend and recovering economy gives him more confidence for long-term growth than the XP migration trend.

"Some of the strength we see is because of XP, but the position I have reached is that while XP is certainly a factor, it's a small factor in the growth we're seeing in the commercial PC business both now and in the future," he said.

"We see much broader strengths and as such, we want to make sure we understand what are the other drivers to the business."