Editor’s note: Intel aims to reinvigorate the PC business with its new line of Skylake processors. No. 1 PC manufacturer Lenovo already is planning to include Skylake processors in a number of models as WTW reported last week. (See links with this post.) But weak demand and longer life cycles will limit opportunities for its own revenue growth, writes Jack Narcotta of Technology Business Research.

HAMPTON, N.H. – Skylake, Intel’s newest chipset, highlights the stalwart chipmaker’s renowned “tick-tock” release schedule is no longer entirely about adhering to Moore’s Law. Numerous announcements in early September 2015 at renowned consumer electronics showcase Internationale Funkausstellung (IFA) in Berlin by nearly every PC OEM of new Skylake-equipped PCs, compute sticks and tablet sets indicate how the conversation is shifting to what tasks the devices will power, versus what processor powers the device.

Intel intends for Skylake’s early release — less than eight months after its Broadwell predecessor and in tandem with the release of Windows 10 — to rekindle demand in the PC market, particularly ahead of the traditional holiday purchasing season in CY4Q15.

TBR believes the Skylake-Windows 10 combination will spur purchases from users with older Windows XP or Windows 7 PCs who deferred upgrading to Windows 8, but fail to generate the momentum necessary to reverse the PC market’s streak of year-to-year revenue decline. A surge in interest in PCs equipped with Skylake will lift unit shipments in CY4Q15, but the combination of the growing appeal of sub-$300 PCs and increased longevity of midrange and premium models will hamper revenue growth well into 2016.

The myriad device announcements at IFA illustrate PC vendors embraced the shift promoted by Intel, and the upcoming slate of hardware releases will showcase the advanced voice-enabled controls and search capabilities, multimedia capabilities and power-saving features made possible by the Skylake-Windows 10 combination. This will bolster the overall value proposition of PCs as a hub of productivity and entertainment, but its impact on kick-starting OEMs’ PC revenue growth will be limited.

The longer purchasing cycles that typically accompany upgrades of older devices will defer purchases by consumers and enterprises, and Windows 10’s nascence in the market will restrict its ability to spur purchases of new devices until its quirks and deficiencies are ironed out by Microsoft.

Moore’s Law is still in play, but its role is growing smaller

As it becomes increasingly difficult for Intel to adhere to Moore’s Law as chipset specifications plateau, how devices are being used by consumers and workers moves to the forefront of purchasing decisions. In June 2015 TBR undertook a large study of device owners, more than 3,000 spread across the U.S., Germany and China, to discover how they are using their devices.

TBR research found the ability to flow — to move seamlessly between numerous devices as they consume content and react to a steady stream of personal and work communications — redefined the computing experience. The “do-it-all” capabilities of PCs cemented them at the center of a diverse and prolific device ecosystem.

A growing list of new voice, video and search capabilities, made possible by Windows 10, requires a processor platform that goes beyond providing additional horsepower for traditional use cases. For example, TBR estimates that over 1 billion PCs are more than three years old, and Skylake’s promises of faster startup times, improved battery life and enablement of new technologies, such as a wireless charging and wire-free displays, represent an important shift for the PC industry.

New chipsets and devices will begin to move from ‘speeds and feeds’

Skylake and Skylake-equipped computing devices are a step forward for Intel and enable OEMs to capitalize on Intel’s architecture as the dominant productivity platform, even in markets where smartphones and tablets outnumber PCs. The devices also quickly atone for some of the manufacturing delays and performance issues of Broadwell, Skylake’s predecessor; Skylake arrives less than a year after the release of Broadwell in January 2015. TBR believes OEMs and Intel recognize processors released during the “tock,” typically associated with performance improvements, now need to be more than technology upgrades.

Combined with weaker demand for PCs, slowing growth in smartphones and changing computing use cases, Skylake highlights how device vendors and Intel are acutely aware their industry is at an inflection point. With Skylake, the conversation shifts from spurring growth driven by technology gains to laying the foundation for growth as vendors leverage Skylake’s technology to rekindle device demand by offering to make thinner, lighter and more power-efficient form factors. However, obstacles in user familiarity with Windows 10 and longer device life cycles will remain through 2016, muting the impact of Intel’s new chipset to spark overall PC market revenue growth.

(C) TBR