The VAR Guy

Intel expects its Q4 2011 revenues to be “below the company’s previous outlook due to hard disk drive supply shortages.” That’s not good news for Intel, but what does it mean in the long run, and how will it impact IT market and the channel? Read on for the rundown …

In a statement released by Intel, the company noted:

… the worldwide PC supply chain is reducing inventories and microprocessor purchases as a result of hard disk drive supply shortages.

Subsequently, Intel is dropping its Q4 2011 revenue prediction to $13.7 billion from $14.7 billion, plus or minus $300 million. Despite the frowns, however, its PC sales are still up in Q4. Intel believes the shortage will continue into Q1 2012, “followed by a rebuilding of microprocessor inventories,” when supplies of hard drives eventually drift back up.

What does this say about the IT industry and the channel as a whole? It says storage demands continue to grow, and isn’t slowing down, which is nothing new for anyone living in the channel. VARs working in the server space likely will feel these processor-to-storage trends the most. But I believe it also shows a shift in the marketplace regarding what technologies are important.

I have a hunch. Aside from the inventory issues caused by the earthquake in Japan and flooding in Thailand (and the numerous other natural disasters in 2011) I believe part of the reason for the shortage is because manufacturers are focusing their resources on something other than hard disk storage production.  There’s a lot of demand and money in solid state and flash storage and everyone knows it. Apple knows it so well that it has long focused on building up its flash storage — so much so that the company now is considering buying a flash storage company much like it bought PA Semi for its ARM CPU designs. Flash storage and mobile CPUs essentially go hand in hand.

Intel has been building flash storage alongside SSDS, but its mobile CPUs are almost nonexistent in popular mobile devices. While it is likely to remain the chip leader in the PC world, Intel’s revenue dip may be indicative more of a shift in the kinds of technology leading the IT world and less an issue of supply and demand of parts.

Check back in January 2012 for Intel’s official Q4 results.

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