Most great companies have one big blind spot, something they can't do right no matter how hard they try.
Atlanta Braves outfielder Jason Heyward's problem is the low, outside fastball. He can't lay off it, and he can't hit it. For Intel (INTC), that blind spot has always been in finished products. Intel chips are great as ingredients inside someone else's box. Intel boxes tend to be "me too" and "too late."
But Intel has another big problem, the mobile market. Because it owns its own factories, Intel designs chips, makes them, and then sells them. Rivals like Broadcom (BRCM), Qualcomm (QCOM) and ARM (ARMH), which sell OEMs more complete solutions and adapt their designs to what manufacturers want, tend to win the market.
As mobile has become more important, these flaws have become more obvious. So now Intel is trying to address both with its own branded mobile phone. It's an Android model that will be sold first through a U.K. carrier, Orange, at about half the price of a comparable iPhone.
The phone is being called the Orange San Diego. Nice that it comes with its own punch line: Where in the world is Orange San Diego?
The launch, and the introduction of a similar phone in China by Lenovo, illustrate the problems Intel faces:
- To enter a market, Intel must develop a relationship with carriers.
- Intel is dependent on others' operating systems, notably Android, and will have trouble distinguishing itself.
- Intel has to come in at low price points to grab any market share, as it's not considered a "brand" in that space.
It is better to be late to a party than to not arrive at all, and Intel is about 10 years late to this party. The question investors have to ask is whether all the good food and drink are gone, and whether Intel is ready for the long game necessary to gain traction in the mobile phone space.
This market is Intel's low, outside fastball. Will it ever learn to hit the thing safely?
Disclosure: I am long INTC.