Change is always inevitable in the technology sector. And in fact, this is not anything new in the industry. Laptop hardware and PC desktop are still at the heart of the business of Intel. And being the largest chips supplier in the computing field, Intel should be devoted in the concept of changing its operational structure in adapting well to the unique server model needs of clients.
Why do you think Intel did just cut 12000 jobs?
This may be quite a shock to some people, especially in the IT industry as it actually accounts for eleven percent of the total staff. After the quarter has ended on March 31, it was stated that the “Client Computing Group” are the largest source of its sales. Its sales also amount to 7.5 billion dollars. And in fact, its sales have improved by two percent basing on the last year’s performance. This was also highly associated with more customers buying more expensive chips. And, the revenues obtained reached as high as 650 million dollars.
This major restructuring is part of the company’s intensifying its focus on smart-connected computing businesses and data centers. This is also a big move that is deemed as an efficient and profitable evolution to be able to move away from the conventional PC sector base. It is also in this way that it can concentrate on the internet of things and cloud-powering types of businesses. These were also believed to be responsible in the increase of Intel’s revenue amounting to 2.2 billion dollars just last year. These made up forty percent of its operational profits in the PC market.
This initiative is also combined well with home gateway, gaming, connectivity and memory businesses. And this will also help fuel a virtuous cycle of growth for the company. Even though this move comes at losing twelve-thousand jobs around the world, this will naturally help the company in the long run. By mid-2017, the layoffs are expected to be completed through a combination of involuntary and voluntary departures. It will also further re-evaluate all of its programs and consolidate more of its sites across different countries.
It was also forecasted that this initiative will help deliver 750 million dollars in savings for this year. There will also be run rate savings of one point four billion dollars by the middle of 2017.
Businesses are now relying more on the online world and are moving away from desktop chips. This is the main reason why Intel will fuel its growth strategies in the market involving internet of things and cloud computing.
Also, “Client computers” are now outnumbered by a lot of mobile devices such as tablets and Smartphones. The company does not also have its established strategic presence in the field of mobile computing. Even its so-called atom shop is not utilized in Smartphones. Even though the Asus ZenPhone 2 is quite good and Android Smartphone utilizes the Atom chipset, Intel cannot still set a realistic gain from this form of partnership. The mobile segment of Intel is still facing the fact of losing money.
The company is expecting weaknesses in the coming months and the entire year. This is also mainly due to the growing sales in the PC industry that reached in high single digits. As it came up with the decision of cutting 12, 000 jobs, anyone would notice that this strategy is almost the same with the transition plan of IBM.
IMB discard its hardware-based computing businesses in the past few years. It just entirely focused on data analytics and cloud computing by means of company acquisitions. This transition may or may not help the companies, IBM and Intel. But, one will never know that this is an effective and realistic strategy to take. They are both interested in reinvigorating growth by means of embracing web-based technologies.
The cuts will help keep the company relevant as the computing industry shift continues. But, of course, this is an effective strategy suggested by the company’s experts. And just last year, Intel took success in the acquisition of Altera. This was aimed at solidifying the development of Intel in the data center field.
The expertise of Altera centered on field-programmable gate array, programmable logic chip devices and system on a chip. These are all intended to a more powerful and more efficient processing for the company’s data center. The technology also helps handle Intel’s simultaneous computation of loads, streamline of logic processes and specific computing tasks.
Beyond the move of the company in cutting jobs, Intel may still need to think how it will find its way of feeding the appetite of the industry for VR and AI. This is especially if it does not want to be left behind the big shift of the use of computers.