Note 30: Operating Segment and Geographic Information

Our operating segments in effect as of December 31, 2011 include:

• PC Client Group
• Data Center Group
• Intel Mobile Communications
• Intelligent Systems Group
• Netbook and Tablet Group
• Ultra-Mobility Group
• McAfee
• Wind River Software Group
• Software and Services Group
• Non-Volatile Memory Solutions Group

   

  In the first quarter of 2011, we formed the Netbook and Tablet Group, which includes platforms designed for the netbook and tablet market segments, and we divested the Digital Health Group (for further information see “Note 15: Divestitures”). In the fourth quarter of 2011, we combined the Digital Home Group within the Netbook and Tablet Group. Prior-period amounts have been adjusted retrospectively to reflect these operating segment changes as well as other minor reorganizations. Additionally, in the first quarter of 2011, we formed the Intel Mobile Communications and McAfee operating segments as a result of acquisitions (for further information see “Note 14: Acquisitions”).

   

  The Chief Operating Decision Maker (CODM) is our President and CEO. The CODM allocates resources to and assesses the performance of each operating segment using information about its revenue and operating income (loss).

   

  Our PC Client Group and our Data Center Group are reportable operating segments. We also aggregate and disclose the financial results of the following non-reportable operating segments: Intel Mobile Communications, Intelligent Systems Group (formerly known as the Embedded and Communications Group), Netbook and Tablet Group, and Ultra-Mobility Group. We also aggregate and disclose the financial results of the following non-reportable operating segments within “software and services operating segments”: McAfee, Wind River Software Group, and Software and Services Group. Each of these aggregated operating segments does not meet the quantitative thresholds to qualify as reportable operating segments; however, we have elected to disclose the aggregation of these non-reportable operating segments. Revenue for our reportable and aggregated non-reportable operating segments is primarily related to the following product lines:

• PC Client Group. Includes platforms designed for the notebook and desktop (including high-end enthusiast PCs) market segments; and wireless connectivity products.
• Data Center Group. Includes platforms designed for the server, workstation, and storage computing market segments; and wired network connectivity products.
• Other Intel architecture operating segments. Includes mobile phone components such as baseband processors, radio frequency transceivers, and power management chips; platforms designed for embedded applications; platforms for the netbook and tablet market segments; and products designed for the smartphone market segment.
• Software and services operating segments. Includes software products for endpoint security, network and content security, risk and compliance, and consumer and mobile security from our McAfee business; software optimized products for the embedded and mobile market segments; and software products and services that promote Intel® architecture as the platform of choice for software development.

We have sales and marketing, manufacturing, finance, and administration groups. Expenses for these groups are generally allocated to the operating segments, and the expenses are included in the operating results reported below.

During 2009, we incurred charges of $1.447 billion as a result of the fine from the EC and $1.25 billion as a result of our legal settlement with AMD. These charges were included in the “All other” category. Additionally, the “All other” category includes revenue, expenses, and charges such as:

• results of operations from our Non-Volatile Memory Solutions Group that includes NAND flash memory products for use in a variety of devices;
• a portion of profit-dependent compensation and other expenses not allocated to the operating segments;
• divested businesses for which discrete operating results are not reviewed by our CODM;
• results of operations of seed businesses that support our initiatives; and
• acquisition-related costs, including amortization and any impairment of acquisition-related intangibles and goodwill.

The CODM does not evaluate operating segments using discrete asset information. Operating segments do not record inter-segment revenue. We do not allocate gains and losses from equity investments, interest and other income, or taxes to operating segments. Although the CODM uses operating income to evaluate the segments, operating costs included in one segment may benefit other segments. Except as discussed above, the accounting policies for segment reporting are the same as for Intel as a whole.

Net revenue and operating income (loss) for the three years ended December 31, 2011 were as follows:

In 2011, Hewlett-Packard Company accounted for 19% of our net revenue (21% in 2010 and 2009), and Dell Inc. accounted for 15% of our net revenue (17% in 2010 and 2009). The majority of the revenue from these customers was from the sale of platforms and other components by the PC Client Group and the Data Center Group operating segments.

Geographic revenue information for the three years ended December 31, 2011 is based on the location of the customer. Revenue from unaffiliated customers was as follows:

Revenue from unaffiliated customers outside the U.S. totaled $45,588 million in 2011 ($37,074 million in 2010 and $29,847 million in 2009).

Net property, plant and equipment by country was as follows:

Net property, plant and equipment outside the U.S. totaled $7,179 million in 2011 ($5,247 million in 2010 and $5,581 million in 2009).