So, tablets are probably not enough to make a substantiating difference to Dell’s overall earnings performance, but over the longer-term, the Intel, Microsoft duo could bring some serious competition to the Google Inc (NASDAQ:GOOG), QUALCOMM, Inc. (NASDAQ:QCOM), Apple Inc. (NASDAQ:AAPL) ecosystem.
Don’t go all in on Intel yet
But, because Intel has a strong product but weak market performance (we have not seen Intel successfully monetize its Atom processor over the past five years) I wouldn’t jump the gun and buy Intel on Intel’s product performance alone. It seems a little risky as we’re investing on the speculation that Intel could somehow price its chips at a price at which it can compete.
Not to mention Apple Inc. (NASDAQ:AAPL) is not open to accepting different chip designs, and Samsung Electronics Co., Ltd. (KRX:005930) is designing its own chips. The remaining handsets are going with Qualcomm because Snapdragon is awesomely inexpensive. So, if Intel wants to win, it has to hold hands with Microsoft.
Samsung Electronics Co., Ltd. (KRX:005930) is open to trying out an Intel processor in its tablets, which seems weird considering Samsung Electronics Co., Ltd. (KRX:005930) has been developing its own chip design for its mobile platform. The main reason for tapping into Intel technology, albeit more expensive, may be to provide a stronger user-experience and gain back some of the market share Apple is hoarding for itself. After all, it is Apple Inc. (NASDAQ:AAPL) that is dominating in tablets.
Source: IDC
Currently, Apple has 39.6% of the tablet market, which it lost a bit of because it tends to have a higher average selling price than its competitors. Nonetheless, Samsung is coming to town with a strong Intel processor, hoping that Intel’s Silvermont will bring down Apple to its knees. Again, the problem with competing with Apple is that Apple is extremely adept at creating user-experiences. The iPad is extremely fast even with an older dual core processor using ARM technology.
Apple still provides a strong user-experience, and for some reason, I’m not sure how much a user will be able to tell the difference of a few millionth of a second difference in page load screens. At least, we can hope that the Samsung tablet will come packed with better multi-media capabilities. Maybe, Netflix, Inc. (NASDAQ:NFLX) will be streaming 4k on a Samsung tablet one day.
In anticipation of this, maybe Samsung does need the help of Intel, but widespread adoption of 4k screen technologies is going to be three years down the road, meaning that the semiconductor landscape will focus more on cost rather than the power of components.
Conclusion
Microsoft Windows 8 should open the doors for a stronger mobile strategy. This will mean that consumers will be buying more Intel chips on mobile computing devices. The problem Intel faces is in scaling its operations, which is heavily dependent on Microsoft’s success in mobile. We would have to wait to see how all this plays out, but for now, investors should bank more heavily on Apple, Google Inc (NASDAQ:GOOG), and QUALCOMM, Inc. (NASDAQ:QCOM) because they have an established track record.
Alexander Cho has no position in any stocks mentioned. The Motley Fool recommends Intel. The Motley Fool owns shares of Intel, Microsoft, and Qualcomm. Alexander is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
The article Intel and Microsoft May Not Be Enough Against Qualcomm originally appeared on Fool.com is written by Alexander Cho.
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