Intel 4Q16 Earnings Call Notes

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Brian M. Krzanich

An explosion of data

“By 2020, the average person will generate about 1.5 GB of data per day, while smart and connected devices of the future will produce data at many times that rate. Autonomous cars, for example, will generate about 4,000 GB of data each day. The resulting explosion of data is creating tremendous opportunity. But data alone isn’t valuable. It’s the transmission, aggregation and analysis of the data that results in value and impact. Intel will play essential role in those steps because our products are key to turning raw data into high-value insight and information.”

We power 90% of machine learning servers

“Finally, in Artificial Intelligence, we believe we have the industry’s strongest product portfolio. Intel processors power well over 90% of servers deployed to support machine learning workload, and we are winning the vast majority of AI solution based on strong product performance and customer value.”

PC is not back to zero unit or positive growth

” Those two things put us in the PC market in the unit level in the mid-single-digit decline. That’s better than if you went back a year or so ago, we were in the high single-digits, depending on how you looked at it and where you counted from the 2-in-1 devices. So, it is starting to get better, but I don’t think we’re back at a zero unit or a positive unit. But as Bob said, what we’ve really been focusing on in that space is how do you make money, how do you sell up, how do you do a better business performance in that kind of market? ”

Moving to public cloud faster than we expected

“I think that certainly some of that is, that it’s moving to the public cloud, it’s moving to those areas at a faster rate than I think we expected. It’s also been a little bit slow about developing private cloud and we’re working with several partners like Microsoft, Azure and others around the private cloud segments as well for the enterprise. But if you take a look at the long-term, we still see this as the growth engine and still getting into that double-digit regime.”

Why we’re in memory

“Sure. So let’s talk about Memory in kind of a big picture, John, and then I’ll let Bob talk a little bit about how the CapEx lays and what our view on CapEx is in the space. But we are in this space for one reason because I understand it’s a cyclical business that tends to be fairly difficult from a price capacity standpoint. But we believe we’re coming at it with two very unique technologies. Our 3D NAND technology has some of the best performance and best cost in the market. Our current version of 3D NAND has a 15% cost value over the competition, and our next version, second generation, has even a higher when you look at it on a density basis. And so we believe we’re going to be able to bring differential cost and performance in 3D NAND that will give us a unique position, and that, combined with our knowledge of the data center, should allow us to really provide compelling product for data center SSDs. 3D XPoint is very different and that is a unique technology that bridges between memory and storage, and we believe it can re-architect how big data applications, artificial intelligence applications where you want large amounts of data being brought up as close to the compute as you can, will really transform not only the architecture of those systems but the performance of those systems.”

Enterprise/cloud dynamic

“our view is that enterprise will continue to decline. A lot of that is those workloads moving to the cloud. It will get to a point though where it starts to stabilize. And those – because there are still things that – workloads that will want to be in a private cloud. At the same time, we believe as the world becomes connected, cloud will grow at a much, much faster rate. And I made a point in the prepared remarks, where if you look at the cloud of today being mostly based on people, the average person will generate about 1.5 gig of data a day. An autonomous car, when those things start hitting the road – and we’ve started to build these data centers for some of the trials we’re working with – I mean you’re talking about petabytes of data that you’re having to deal with and 4,000 gigabytes a day off is the average autonomous car. You put a couple of those on the road and you need petabytes of storage to handle that. So, we do believe that the cloud will move at a faster rate as these connected devices become basically more available. That said, the cloud is becoming bigger than the enterprise.”

Robert Swan

We’ve taken a more cautious view of PC

“Now, let me turn to guidance. First, some context. First, our guidance assumes a stable macroeconomic environment, but we have taken a more cautious view of PC consumption versus third parties, particularly in our outlook for the emerging markets including Russia, China and Latin America.”