As someone who very closely follows Intel (NASDAQ:INTC), it puzzles me when people remark that Intel has yet to land a single design win with its products. Now, this is obviously absurd to followers of the company, but I think that the general investment public seems to be quite unaware of just how far the company has come over the last year with its smartphone effort and the significant opportunity that lies ahead thanks to the firm's commitment to the Android ecosystem.
A Myth: The Ecosystem Is All ARM, So Intel Can't Get In
Wrong, wrong, wrong! The smartphone "ecosystem" consists of the following major platforms:
Now, there are certainly some other niche players such as Research In Motion's (RIMM) BlackBerry, but when it comes to widespread adoption, the three mentioned above are going to take the lion's share of the smartphone market for the foreseeable future.
How is Intel positioned here? Well, as of 2011, the Intel Architecture became a first-class citizen for Google's OS. Since then, thanks to diligence from both Google and Intel, an Intel Architecture (X86) chip runs Android just fine. This, simply put, means that if Intel produces a solid product, the phone vendors can now consider Intel system-on-chip solutions just as easily as they can choose from the variety of ARM based solutions from vendors such as Qualcomm (NASDAQ:QCOM), Nvidia (NASDAQ:NVDA), and MediaTek.
Just how large is the Android landscape? According to some estimates, Android's 2012 market share was a whopping 68.3%. Apple's iOS came in at 18.8%, and Windows Phone at 2.6%. Intel's probably not going to get into the iPhone (especially as Apple continues to build up its semiconductor prowess), but this would have been the case whether or not Intel had a killer phone chip solution years ago.
The market opportunity is there, and design cycles are short enough in the phone world that even if a chip vendor misses one cycle, it can try to get into the next crop of designs.
Intel-Google Partnership Can Be Huge
Intel and Google seem to be getting mighty friendly. While Intel had previously announced a couple of fairly insignificant design wins, the first "real" win was the Motorola Droid Razr i smartphone shipping . While the United States counterpart, the Droid Razr M, is powered by a Qualcomm Snapdragon S4, the Razr i (shipping in the UK, France, Germany, Brazil, Argentina, and Mexico) comes packing an Intel Atom Z2460. It is very likely that the US version went with the Qualcomm part because the modem that Intel pairs with the Z2460 does not support LTE (which is necessary for a mid-to-high end phone in the USA).
But this is only the beginning. Should Intel's solutions become tangibly better than what's available today and keep pace with Qualcomm on the features side, Google/Motorola could very well go with Intel in a flagship phone. Perhaps a design win in Google's rumored upcoming "X-Phone" could be in the works? As Intel establishes credibility as a smartphone silicon provider, Google could start to use Intel's chips across its popular "Nexus" line of phones and tablets. The combination of the powerful "Google" and "Nexus" brands with the "Intel" brand could lead to an interesting partnership and increased sales for Google's own phone efforts.
What Intel really needs is to score designs. Good silicon is useless if it's not in designs that really sell. Watch for a deeper partnership of Intel with Google/Motorola; it could be a sign that Intel's efforts in the space will finally pay off hugely, which would remove a lot of the pessimism surrounding shares of Intel.
Additional disclosure: I may initiate a long position in $QCOM within the next 72 hours