Android, Powered by Intel
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Broadcom, QualComm, Nvidia and TI all have mobile processors for smartphones and tablets, and with good reason. Gartner estimates that there were 472 million smartphone sales worldwide in 2011 which was a 58% increase from 2010 and for the first time total worldwide smartphone sales surpassed total PCs sold in 2011 according to a market analysis by Canalsys. These processors are not the same as those found in desktops and laptops as they are smaller, less power hungry and need to be able to run without fans and not burn the hands of users. At the same time smartphones are becoming more and more advanced requiring more powerful processors, we have seen dual core and even quad core phones.
Conspicuously lacking in the smartphone processor world is the world’s largest processor maker, Intel (NASDAQ: INTC). This is about to change, in fact the first Intel powered smartphone has launched in India. And in the United States Intel has struck a multiyear deal with Motorola to bring Intel powered smartphones to the US by the end of 2012. Though Intel is late to the mobile processor game, thus far their most mobile processor has been the somewhat underpowered Atom chipsets found in netbooks. Intel's entrance into smartphone and tablet processors will be far more important than netbook processors, in fact it will be the most important division of Intel in the next three to five years.
Intel has been trying to bring an Intel based smartphone to the market for years, in 2010 they showed off an Intel based LG smartphone but that phone never made it to market. Intel is currently working on several Atom based mobile chips, their latest chip is called Medfield (the first designed for mobile phones and tablets), the Medfield chips are the ones that will be powering the Motorola phones in the not so distant future and after Medfield the next Atom release is Clover Trail which should be out later this year.
Because of Intel’s slow entrance into the mobile market, a processor architecture called ARM (NASDAQ: ARMH) has captured 95% of the smartphone processor market. Companies including Samsung, TI, Broadcom, LG, Nvidia, Apple and others are currently using ARM. This means that Intel will be in an uphill fight for market share out of the gate. However even though ARM has a huge market share, it is made up of various companies who all license ARM intellectual property and then make their own ARM based processors. So under the service the mobile processor market is far more fragmented than it would seem. Thus with a good mobile chipset, and more deals like the one Intel has with Motorola, Intel will be able to push its way into the smartphone world.
Smartphone sales growth has been estimated by Gartner to be 39% in 2012, which although it is slower than smartphone sales growth in 2011 is still excellent growth, far more growth than Intel’s other divisions. Tablets will also see explosive growth in the next few years and by 2015 Gartner estimates that over 300 million tablets will be sold annually. With a competitive mobile processor offering, and competitive is the key, it has to have good battery life, be powerful, small and not be very hot, Intel will be able to quickly establish themselves and outsell most of the individual ARM makers in the market today.
Intel’s initial success will come with Android handsets as they will be able to go to individual hardware manufacturers and sell them on the benefits of their chipset over the current ARM ones. However the hardest egg to crack will be Apple. Intel already has their chips in Apple’s desktop and laptop computers, but Apple uses an in house ARM based chip for their IPhones and IPads. If Intel could switch Apple to an Intel based processor for the IPhone it would virtually ensure their mobile processors success. Recently the CEO of Intel stated that one of their jobs is to make sure that their chips are so compelling that Apple “can’t ignore us.” Intel can still be one of the largest players in mobile processors without an Apple deal and Intel’s recognition of this comes as we see them inking another deal this time with Lenovo to bring Intel powered mobile devices to market in the coming year.
Already a household name, Intel based processors are in the majority of personal computers as well as a host of other electronics and this established high quality brand will help Intel’s initial smartphone success. In 2010 they paid 1.4 billion dollars in an all cash deal for a mobile chip company called Infineon Technologies, which allowed Intel to jump start their mobile offerings by buying outright the fifth largest supplier of mobile phone processes. Infineon Technologies has now been rolled into Intel’s mobile division.
A fragmented market for smartphone and tablet manufacturers (every manufacturer takes an ARM reference and then makes it themselves), the huge amount of resources Intel can put into its smartphone processor line and continued rapid growth of the mobile processor market will allow Intel to be hugely successful in the smartphone processor market, once they truly get into it. Thus in the next year the smartphone processor market will be transformed from a one horse show into a two horse race as the current leader ARM attempts to hold its own against the giant that is Intel.
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