The year in PCs: Carly's gone, Dell slows, AMD surges

The PC market has a somewhat unfair reputation as the mature, staid sector of IT. True, the basic PC is over 20 years old and no longer has the buzz factor of generated by Internet companies like Google, but some of the most fascinating, controversial, and relevant stories of the year involved PC makers and their chip suppliers. A sampling, in chronological order:

February: HP fires Carly Fiorina, architect of the company's historic merger with Compaq Computer. Citing a desire for a more hands-on executive, HP's board of directors decided to send Fiorina packing with a $US21 million parachute, of course. Fiorina left behind a sprawling IT giant that was first or second in many categories, including the PC market. But she was criticized for engaging in a jet-setting approach to corporate management while HP floundered against Dell's steady advance in the three years since the 2002 acquisition. Fiorina was replaced in March by NCR president and CEO, Mark Hurd, who has left HP largely intact but cut 15,000 jobs from the payroll.

April: Intel and AMD release their first dual-core processors. Acknowledging that an era of fast single-core processors has melted from the excessive heat needed to run those chips, the companies joined their server processor colleagues in moving to dual-core designs. Intel's transition to dual-core chips was rocky. A company engineer admitted in August that its first dual-core PC chip was hastily designed and built to compete with AMD's dual-core products. By the end of the year, AMD was neck-and-neck with Intel in the US retail PC market, an unfamiliar position for the world's largest chip maker.

June: Apple Computer announces plans to use Intel's processors. Ending years of separation from the rest of the PC market, Apple co-founder and Chief Executive Officer Steve Jobs joined Intel President and CEO, Paul Otellini, to announce that Apple would use Intel's chips starting next year. Jobs claimed the switch was needed because Intel's future road map offered better performance per watt of power consumed than IBM had in store for PowerPC. Apple is expected to use Intel's forthcoming dual-core Pentium M processor in a new notebook and Mac mini PC, and eventually transition its Power Mac desktops to the x86 instruction set, setting up months of work for Apple software developers.

June: AMD sues Intel for antitrust violations. AMD filed an antitrust lawsuit and launched a spirited public-relations campaign against Intel, accusing the larger company of authoring contracts with PC vendors that tied the selective distribution of rebates on processor purchases to quotas on purchases of AMD's chips. Intel has forcefully denied those charges, and promises a fight in a Delaware courtroom that could come as early as the end of next year and involve PC industry luminaries such as Michael Dell, Fiorina, and Gateway Inc. founder Ted Waitt.

November: Dell reports its second straight disappointing quarter. Dell's runaway growth throughout the recession and recovery of the post dot-com era came to an end this year, although the company isn't exactly falling apart. Dell will fail to meet its goal of $US60 billion in revenue for its 2006 fiscal year, which ends in February, after missing revenue targets in both its second and third quarters this year. The company blamed a worse-than-expected performance in the US consumer market for the shortfall, but analysts believe that Dell's vaunted direct sales model is running into growing pains as the company tries to expand into emerging markets around the world.

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Tom Krazit

IDG News Service
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