Intel Corporation (NASDAQ:INTC) has been working hard to shrink transistors to the point where its chips become more suitable for mobile computing applications. With tablets being the fastest-growing segment of mobile computing, it’s not surprising to learn that Intel wants to own a large piece of this pie. Not to mention, the tablet market is expected to ship more than 350 million units a year by 2017 — about the size of the PC market today.
Sizing up the market
Photo: Intel Corporation (NASDAQ:INTC)
Once Windows RT is factored into the equation, there’s about 82 million tablet devices left for Intel’s addressable market. If we use NVIDIA Corporation (NASDAQ:NVDA) Tegra’s average selling price range of $20 to $25 as a proxy, this opportunity could currently be worth as much as $1.6 to $2 billion to Intel’s top line.
Public enemy No. 1
The first order of business for Intel is to gain an edge against NVIDIA, which commands about 17% of the tablet market. Considering that the tablet market more closely mirrors the PC market in terms of user experience, Intel has tremendous potential to win over the hearts of tablet-makers and users alike — especially in the Windows tablet computing space. In other words, Intel Corporation (NASDAQ:INTC) has the power to evolve the tablet market into something much more compelling than today’s offerings.
Source: Intel.
Pictured above is Intel’s upcoming Bay Trail processor, which is expected to make a splash this holiday season. This x86-processor will be the world’s first tablet processor that will be based on 22-nanometer designs — a full generation ahead of the ARM competition. It will give tablet makers the capacity to design Windows 8 tablets that can run the full version of Windows 8. I believe that Bay Trail will ultimately pave the way for a $200 Intel-powered Windows 8 tablet in the future, giving Google Android and even Apple’s iOS a run for their money.
A great balancing act
Although Intel has an opportunity to capitalize on new areas of growth, it may come at the expense of the already stagnating PC market. The PC market is currently running the risk of experiencing a prolonged user replacement cycle, stemming from increased user adoption of tablets and smartphones. Additionally, Intel Corporation (NASDAQ:INTC) is accustomed to receiving higher average selling prices than what the mobile computing industry commands. Together, these factors could negatively impact Intel’s level of profitability over the long-term.
Then again, if Intel wants to remain relevant in the future of mobile computing, it may have no choice but to sacrifice profitability in exchange for securing its place in the future of consumer computing.
The article How Tremendous Is Intel’s Tablet Opportunity? originally appeared on Fool.com.
Fool contributor Steve Heller owns shares of Apple and Intel. The Motley Fool recommends Apple, Intel, and NVIDIA. The Motley Fool owns shares of Apple, Intel, and Microsoft.
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