Intel announced first-quarter revenues of US$12.8 billion, up 24% on year with net profits of US$3.2 billion, up 21% on year, both new historical records. However, sources from PC players pointed out that the advance of tablet PCs is expected to significantly impact Intel soon if the company cannot come out with something to compete.

The sources pointed out that Intel's strong first-quarter performance was because the company has already combined revenues from the acquisitions of McAfee and Infineon, while the first quarter this year had one extra week compared to previous years as Intel recently adjusted its date range for the quarter.

In addition, benefiting from expanding cloud computing applications plus demand for data centers, Intel's server CPUs also saw obvious growth and were one of the drivers of its strong profitability in the first quarter. In conclusion, Intel's strong first-quarter performance was not largely due to its consumer PC segment.

Since Intel still holds the major control of the PC platform, despite that its partners are seeing dropping gross margins, Intel will still be able to maintain a gross margin of above 60%. Although the effect of tablet PCs in expanding cloud computing applications will help Intel's server CPU business to grow, impact on the company's consumer segment is expected to devastate its overall performance.

As for Intel's plans to reportedly subsidize its partners with US$10 for producing each Intel tablet PC, the sources pointed out that Intel should be helping its partners to re-energize the whole PC ecosystem. Since its notebook and netbook partners are all facing a crisis by being squeezed out of the market, if its downstream partners are all severely impacted, Intel may not stay out of the damage forever.