Intel: The Next Unit Of Computing - NUC

| About: Intel Corporation (INTC)

There was no announcement by Intel (NASDAQ:INTC), no dog and pony show, but this might be one of the big things on the horizon.

NUC is The Next Unit of Computing. It is a 4.5" x 4.4" x 1.5" box. The box effectively replaces desktop computers. The NUC has an x86 motherboard, Wireless LAN, a Solid State Drive, and DRAM memory and some other subsystems.

The curious thing about this is the way I learned about it. My son-in-law called me one day and mentioned they were re-doing all their IT equipment, but not with notebooks and not, heaven forbid, with desktops or towers. They were using NUCs. I asked him what a NUC was. When he was through, he had described a desktop computer that would fit in your hand. They cable tied them to the back of their monitors. I didn't think much about it until my wife came home from a city council meeting last night. She is the mayor of our little town. Turns out that the city council had just approved $151,000 worth of new IT. The seven-year-old notebooks were to be retired, and not replaced. They were using NUCs! The present system had become unstable and was down much of the time as a result of all the different hardware and software used in different ways throughout the city. Now, with a NUC-based system, the staff could suck their work down from the cloud, do work, take notes, etc. When at work, they are able to access the cloud again and have everything they had been working on at home.

Nothing surprisingly new, but the city's system is expected to become more stable and usable. The reason that I am so impressed by our city selecting NUCs is that I personally know how much effort they expend researching this kind of thing.

One occurrence is a curiosity, but two occurrences of using NUCs starts to smack of a trend.

Intel has some videos on the website here and here. The system is available on Amazon (NASDAQ:AMZN), so they must be serious about it. Short mixed review of NUC here. i7 NUC coming.

So, this thing has the CPU, the SSD, the DRAM, the WiFi, the comm channels, including Thunderbolt. It occurred to me that this is what I have been muttering about in some other recent articles, just in a little bigger format. It takes a little time for it to sink in that this is not a Dell or HP product, this is an Intel product. The SSD and DRAM and all the bits are sold by and bought from Intel directly.

It also dawned on me that the industrial/business upgrade cycle of PCs is happening; they just look a little different this time. To the extent that NUC is successful, Intel will directly supply multiple times the dollar value of compute products it is currently supplying indirectly though the PC makers. Unlike the speculation in previous articles, Intel would not likely manufacturer the DRAM and NAND components used in the NUC except through its Joint Venture with Micron (NASDAQ:MU), but the entire processor board comes from Intel and at least some of the other subsystems (think SSD) will be bundled with the NUC system.

If Intel NUCs are accepted by the market in a big way, how are the third party market analysts, who revel in the continuing prediction of the demise of the PC, going to count all the PCs sold? They haven't done a very good job of that the past few quarters anyway, so if NUC makes up 15-20% of PCs sold, they will continue to underestimate the PC market.

The NUC was intended for signage automation, kiosk management and other more industrial applications, however, as PC World says, "it makes a good little home PC." The article also mentions that Intel is quick to point out that the company is not in the business of selling complete systems -- nor does it intend to enter that business with the NUC. Of course, that is exactly what it has done, probably out of frustration with the creative lethargy at its two largest customers, HP (NYSE:HPQ) and Dell (NASDAQ:DELL).

Just another small reason to own Intel.

Disclosure: I am long INTC. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.