Given Apple’s (AAPL) track record of creating blockbuster consumer devices, the upcoming Apple tablet could be the most successful mobile computing alternative to a notebook PC. Intel (INTC) does not provide the processors used in many tablet PCs, smartbooks and e-readers, and we do not expect it to provide the processor used in Apple’s tablet. Intel could be negatively impacted if Apple’s tablet and similar devices siphon off demand for Intel-based notebooks and netbooks.
Tablets Use Smartphone Processor Technology
Improvements in processing speed and power consumption of processors have made tablet PCs, smartbooks and e-readers increasingly prevalent. Many of the new developments in processor technology are happening outside the domain of PC processor maker Intel.
Companies like Qualcomm (QCOM), PA Semi, Freescale and Infineon (OTCQX:IFNNY) have led the way in developing the type of processors used in smartphones like the iPhone and are now providing processors used in tablets, smartbooks and e-readers. Adapting the processors used in smartphones for use in tablets is often easier than modifying PC processors geared for higher performance and power consumption (like those made by Intel) for similar use.
Prevalence of Smartphone Processors
Below are four notable developments over the past year that highlight the on-going trend of using smartphone technology in tablets, smartbooks and e-readers:
- HP (HOQ), the world's biggest PC-maker, recently demonstrated a scaled down personal computer based on Qualcomm's Snapdragon chip.
- Lenovo (OTCPK:LNVGY), China's biggest PC maker, is also powering its "Smartbook PC" on Qualcomm's Snapdragon chip.
- Amazon's (AMZN) Kindle e-reader and the Sony (SNE) e-reader are both based on chips supplied by Freescale Semiconductor.
- Apple Tablet PC device is likely to be based on a processor developed by PA Semi, a chip shop Apple acquired two years ago.
Threat to Intel and Notebook / Netbook Market
While Intel currently dominates the market for notebooks and netbooks, the increasing popularity of tablets, smartbooks and e-readers are a definitive threat to Intel.
You can modify the Global Notebook Shipments forecast downward to see how Intel’s stock would be impacted if Apple’s tablet and similar devices reduce demand for notebooks and netbooks.
Disclosure: No positions