By Mike Kapsch
At last week’s International Consumer Electronics Show, the company announced it had just finalized deals with Lenovo (OTC: LNVGY.PK), Motorola (NYSE: MMI) and China Unicom (NYSE: CHU) to begin providing processors for their mobile devices this year.
Intel also recently announced that it reached a deal with INSIDE Secure to license its near-field communications (NFC) technology. This is a strong signal that Intel is serious about moving into the mobile arena.
Neil Garner, CEO of NFC-technology firm Proxama, tells us that there are some interesting applications for NFC tech in PCs, such as being able to “share information with other NFC-devices by simply tapping them against a touch-point.”
That means instead of using cables to transfer any pictures, videos, or other data from a mobile device, you could simply tap it to your PC and everything you want would transfer. But the main application for this technology appears to be for mobile wallets, such as Google’s (Nasdaq: GOOG) Wallet. Thus, Intel is most likely licensing this technology in order to compete in the mobile arena.
And for Intel, these deals couldn’t have come at a better time.
As The Guardian reports, “Many on Wall Street deem Intel at a crossroads, where it either has to carve out a share of the mobile market or risk becoming irrelevant in the long run as PC sales slow…”
Slowing PC Sales Threaten Intel’s Future Growth
According to market research firm IDC, 2011 was the second-worst year for U.S. PC sales in history. Gartner, another research company, expects this number to dip an additional 3.8% in 2012.
Intel relies heavily on PC sales to make money. Despite a bad year for the U.S. PC market, the tech firm still managed to grow its 2011 PC chip sales roughly 16%. It also earned a record high $54 billion in revenue for the year.
In fact, Intel’s shares climbed 17% as a result…
And although the company has been strong in enterprise IT, management knows Intel won’t be able to rely on just that and PC sales to grow its bottom line much longer.
Smartphones and Tablets Replacing PCs
Last year, for the first time ever, tablet and smartphone sales outpaced total PC sales. Smartphone sales were up an estimated 50% for the year. Tablets were up 207%.
Over the next 12 months, smartphone and tablet sales growth is set to slow… to 32% and 60% respectively. But revenue from these two devices alone are still expected to hit an astounding $1 trillion this year.
The bottom line is: Smartphones and tablets have put the future of the PC in jeopardy. That’s why Intel’s move into the mobile market can’t be overstated. It’s important to note that Intel hasn’t had much success in recent attempts to penetrate this market, but with some impressive products featuring its new chips set for release in 2012, it could finally make this jump.
Intel may find it slow going as it works to prove to investors it can adapt to a new tech landscape fueled by tablets and smartphones…
But with $15 billion sitting in its cash reserves and a mobile chip that already challenges ARM’s processors, Intel has plenty of capital and know-how to finally muscle its way into the soon-to-be $1 trillion smartphone and tablet market.
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