Intel Intends to Merge PC and Mobile Divisions by Early 2015

Despite heavy losses in the mobile-chips unit, Intel plans to merge its PC and mobile groups into one division by early next year. Kirk Skaugen, a senior vice president who now oversees Intel’s PC Client Group, will take charge of the newly combined unit.

The reorganization, which was announced Monday via an email sent to employees by chief executive Brian Krzanich, is expected to be completed in the first quarter of 2015.

Krzanich said in the email:

“The market continues to evolve rapidly, and we must change even faster to stay ahead.”

The transition was intended to improve internal communications and efficiency, but it proved to be an immediate necessity as the lines separating consumer devices blur.

“We are seeing a blending of the lines between various devices. The idea is to accelerate our efforts for tablets and create greater efficiency,”

Intel spokesman, Chuck Mulloy, stated.

The chip giant has been long struggling to expand its chip sales for mobile devices in an attempt to diversify itself so it would be less dependent on its core business of selling chips and server systems all over the world.

Although Intel has spent billions of dollars trying to get its mobile chip business running, it has just a couple of notable products, such as Samsung Galaxy Alpha smartphone in Europe and Asia and the Samsung Galaxy Tab S tablet in the US.

Last month, the company reported a 12 percent better than expected third-quarter profit as PC and server-system sales made up for the weak sales in its mobile division.

PC sales have been in decline for years, since consumers switched to mobile devices. However, Intel had this third-quarter profit partly due to business customers who chose to upgrade to machines running the newer Windows 8, since Microsoft ceased to provide technical support for Windows XP this year.

On the other hand, Intel’s mobile division recorded an operating loss of $1 billion during the quarter and its revenue shrank to just $1 million, from $353 million a year earlier. The main reason for the loss were the subsidies Intel pays to manufacturers to help them win new mobile businesses.

Stacy Smith, Intel’s chief financial officer, said in an interview:

“We knew this was going to be a year of significant investment and significant loss. While none of us like the size of that loss and we’re committed to reduce it next year, operationally we’re doing exactly the things that we have to do in a very important business.”