PCs Are Back

TechFlash reports: Intel Corp.'s blowout earnings report, including an 875 percent increase in quarterly profit, is the latest in a series of encouraging pieces of news for the personal computer market. As part of the report, the chip-maker said revenue in its PC Client Group was up 10 percent for the quarter.

That bodes well for Microsoft Corp., which relies heavily on sales of personal computers to fuel revenue in its Windows division. The company reports its earnings on Jan. 28. At the same time, it also increases the pressure on Microsoft to turn in a strong result, particularly given the positive reception for Windows 7 in the market.

Research firm IDC reports that worldwide PC shipments rose more than 15 percent in the fourth quarter. Declining computer prices were a big driver of demand, the firm says.

"In addition to the continuation of price declines throughout the year, other factors were in play for the fourth quarter," IDC said. "Following a stream of improving economic indicators which began in 3Q09, a release of pent-up demand was evident as buyers focused on a vast array of value-oriented notebooks that dominated the channel landscape in the holiday season."

Based on those price trends, it will be important to pay close attention to Microsoft's "OEM premium mix," which measures the proportion of machines that come with high-end Windows editions. The shift toward low-end notebooks and netbooks cuts into that premium mix, and diminishes the benefits of the growth in PC shipments.