Intel: Moving Ahead Rapidly In Another Multibillion Dollar Market.

| About: Intel Corporation (INTC)

Industrial Internet is a fast emerging concept and currently is one of the biggest opportunities for the companies that operate in the related field.

Industrial Internet refers to new ecosystems of machines connected through networked sensors (hardware) and software. Industrial Internet is the prime source of industrial Big-Data, which holds a lot of unique knowledge that can help industries to improve efficiency, productivity, safety, environment protection, R&D, etc. Due to this unique knowledge that can be derived from this data more and more companies are looking to collect and analyze the data.

  • Market size:

Industrial Internet market is heading towards a phenomenal growth. The market is expected to touch $514 billion by the year 2020 from $20 billion in 2012 (see the chart below), representing a compounded annual growth rate of about 50%. The prime reason behind the growth is the value that Industrial Internet can deliver to the user industries like power, aviation, healthcare, transportation, etc. Industrial Internet is expected to deliver huge value to the user industries. As per the estimates, by the year 2020 Industrial Internet will be delivering $1,279 billion of value, representing a Return on investment (ROI) of 149%.

Industrial Internet:

Industrial Internet involves Internet of things, intelligent machines, machine-to-machine communication, and data analysis.

  • Internet of things ((IoT)):

IoT means the networked connection of people, data, processes and things; Where everything on a same network (person, device, application, system, etc) can anytime connect and interact with each other, not just manually, but also through the devices or applications, and can react to the particular events (mainly application generated events) that occur when something predefined happens or when an application from a connected device prompts another connected device to do something.

  • Intelligent machines:

Intelligent machines are intelligent because they can create, collect and process data to work more efficiently and safely. They can do so because the parts of an intelligent machine are integrated with sensors (includes hardware and software components) that are programmed to collect data. An intelligent machine can use this data on a real time bases to make machine work more efficiently and safely. Moreover, an intelligent machine can also communicate with other networked machines in a programmed manner.

  • Machine to machine communication:

Machine to machine communication is the term assigned to the capability of different machines or parts of a same machine to communicate with each other (through integrated sensors) whenever a predefined event occurs. This communication allows machines or parts of same machine to react on a real-time basis to a predefined event that too without human intervention.

  • Data analysis:

Machines integrated with the sensors generate a huge amount of data. Machines use this data on real-time basics to operate in a better way. The data generated is collected and used to perform analytics. The companies use the outcome of the data analysis to make better machines by better understanding of machine mechanism and early fault detection.

Intel presence:

Intel Corporation (NASDAQ:INTC) designs and manufactures some of the world's best microprocessors. The company is a dominant player in PC and Data-center markets, but the company has a negligible presence in Industrial Internet market. This is due to the fact that the company traditionally operates in PC and Data-center markets. Its chips considered as too power hungry too be used for Industrial Internet.

However, during the latest "Intel-developer-forum" (IDF) the company introduced a new SoC named Quark. With the introduction of new SoC, the company makes it clear that it is moving ahead in Industrial Internet space and in years to come it intends to become a major player in Industrial Internet market. The company's strategy for Quark is to develop a SoC, which is small in size, low on power, secure and customizable for Industrial Internet.

Quark SoC:

First showed at IDF 2013, Quark SoC is the company's smallest ever SoC. The SoC is designed for applications where lower power and size take priority over higher performance. The SoC can be used to develop innovative solutions for ubiquitous computing markets and Industrial Internet. Quark is truly meant for Industrial Internet as it meets most of the requirements for Industrial Internet like small size, low power, open architecture (customizable) and platform security.

  • Size:

Small size is one of the key requirements for Industrial Internet market, as multiple chips needs to be integrated in one single machine and the small size allow the chips to be integrated in the machine parts without altering the machine design. The company has developed the SoC while keeping in mind this requirement of Industrial Internet. The SoC is based on the core which is one-fifth of the size of Atom chips (22-nanometer) designed by the company. Currently the SoC is manufactured on 32nm process technology, which leaves a lot of space for further size reduction for more complex requirements.

  • Power:

Low power consumption is another key requirement for Industrial Internet market, as the integrated chips normally are powered by integrated batteries, and high power consumption will drain out the batteries in a quick time and will affect the overall economic and operating cost of machines (high power cost and early replacement of batteries). The SoC is based on the core which needs one-tenth of the power as compared to Atom chips (22-nanometer). The SoC is also integrated with the technology like "idle States", which is used to save power when the processor is idle.

  • Open architecture (customizable):

One of the key things that is needed for the success in the market is designing flexibility because the market for Industrial Internet is extremely vast and the even a single machine may need multiple products that can perform different tasks or run different applications. The new SoC is "open architecture" product and the company termed it as "synthesizable", which means that the customers can designed and customize the SoC as per their requirement and not only can run but can also built their own IP/applications around the core.

  • Security:

Security is one of the prime concerns in the IT industry. The SoC comes with "Execute Disable Bit" feature, which helps to secure the platform by reducing its exposure to viruses and malicious-code attacks.


Though the company has mentioned that Quark is a SoC for Internet of things, but the features of Quark primarily met the requirements of Industrial Internet (including wearable with limited functions). A major part of Internet of things also includes the segments such as smartphones, tablets, etc., where Quark will found negligible use (unless the company scale-up the performance of the SoC).

Industrial Internet is a massive opportunity due to the rising popularity of Big-Data (reasons explained above). Unlike tablet and smartphone markets the company's entry into Industrial Internet (to some extent) is a natural extension of its data-center business as most of the data collected through the Industrial Internet will go to the data-centers and the company is a leading player in the data center market. This could work as a big advantage for the company as the better technological understanding means the better integration of Data-center and Industrial Internet architectures that will lead to better performance.

The company's presence as a developer of software products for embedded computing systems through Wind River, which develops real-time operating systems, middleware, and software design tools for a variety of embedded computing systems will further enhance the company's Industrial Internet offerings in the years to come as it will allow the company to offer Industrial Internet products as a ready to be implemented, fully developed solutions rather than just a programmable SoC.

All in all, the company is increasingly using its manufacturing and R&D capabilities to enter the new markets. There is every reason for the company to feel confidence and excited about its possibilities in the Industrial Internet market due to all the reasons and company's strategy discussed above.

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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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.