Intel refocuses and exits motherboard business

Chip maker makes a good move in a tough market, say analysts

Intel's decision to leave the motherboard business is a smart move in a troubled market, according to analysts.

Intel confirmed to Computerworld that it will slowly back off the motherboard business over the next three years. Intel spokesman Dan Snyder said the company would not comment on the number of employees affected.

"As Intel gradually ramps down its motherboard business, we are ramping up critical areas of the desktop space...," Snyder wrote in an emailed statement. "The internal talent and experience of 20 years in the boards business... is being redistributed to address emerging new form factors -- desktop and mobile - and to expand Intel's Form Factor Reference Design work and enable our partners to develop exciting new computing solutions."

Intel noted, however, that the desktop segment continues to be a major focus for the company.

Considering how badly the PC market has struggled over the past year, Charles King, an analyst with Pund-IT, Inc. said it sounds like a smart move for Intel to make.

"It seems pretty straightforward," he said. "Given the long-term declines projected for desktop PC sales, I expect it was mostly a tactical business decision based on moving employees into areas -- mainly mobile products -- where profitability is higher."

There has been some speculation online that Intel's phaseout of the motherboard business means that the world's largest chip maker is angling to pull out of the PC market altogether. That would be a big leap and and an unwise move for a company that still generates a lot of revenue off PCs, analysts noted.

Rob Enderle, an analyst with the Enderle Group, said PCs are still lucrative to Intel, which is why the company's not giving up on them.

"There are plenty of motherboard makers who are chasing Intel's leading technology now, and these resources could be better spent in areas where Intel is having bigger problems, like tablets and smartphones," he added. "Building motherboards was to address a problem that currently doesn't exist anymore. They aren't abandoning PCs. They are abandoning a strategy that no longer fills a critical purpose."

Sharon Gaudin covers the Internet and Web 2.0, emerging technologies, and desktop and laptop chips for Computerworld. Follow Sharon on Twitter at @sgaudin, on Google+ or subscribe to Sharon's RSS feed. Her email address is sgaudin@computerworld.com.

See more by Sharon Gaudin on Computerworld.com.

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