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The popular technology news and analysis website, Bright Side Of News, noted in a recent article that Qualcomm's (NASDAQ:QCOM) advertisement showed a phone based on its Snapdragon system-on-chip performing significantly better in a number of everyday phone usage tasks than a phone powered by a "competitor." As BSN noted, this competitor looks an awful lot like the Lava Xolo 900 phone powered by the Intel (NASDAQ:INTC) Atom Z2460 Medfield processor.

The video is brutal, showing the Intel-based phone significantly underperforming the Qualcomm-based device. This advertisement highlights the real "problem" with Intel's mobile strategy. It isn't about X86 vs. ARM and it isn't about being late to the party. It's about the product. And right now, Intel's not getting the design wins in the major phones because its products (along with everyone else's, for that matter) are not particularly competitive with Qualcomm's products in terms of performance, integration, and power consumption.

It's a Technological Race Now

The interesting thing here, though, is that the race really does come down to technology. Google's (NASDAQ:GOOG) Android is compatible with the X86-64 instruction set, so Intel and Google engineers can use initial deployments of its chips in the developing nations to fine tune any remaining compatibility quirks for deployment in the developed world.

But, more importantly, with these software barriers broken down it'll all come down to who can design the better chip for the lowest cost. If Intel can bring its process advantage to the mobile lineup (which it has not yet done), then that will be a big advantage as it will allow for cheaper, more feature-packed chips than the competition's.

The next thing Intel needs to do is to actually win on the performance/watt side. The current Medfield is based on a very dated micro-architecture that does not utilize a number of modern concepts in computer architecture (in some ways, the 1995 Pentium Pro is more advanced than the current Atom). If Intel utilizes its transistor advantages to develop more aggressive CPU cores, beefier integrated graphics, more sophisticated dedicated hardware (video decoding, for instance), and so on, then OEMs will have very legitimate and compelling cases to use Intel's solutions.

Brand Equity -- Is It Really Relevant Here?

Back in the heyday of the PC, the "Intel Inside" branding campaign was particularly exciting. Even when Advanced Micro Devices (NYSE:AMD) had superior products, Intel still managed to out-sell AMD's processors in the client space. However, times have changed.

It ain't about the brand of the processor. The end user does not really care if the smartphone has a Qualcomm chip or an Intel chip or a chip from Joe's SoC Company. The user is buying a smartphone. The phone needs to be fast, it needs to conserve power, and it needs to have great software.

In the latest ads for the Intel-powered Orange "San Diego," there is a significant focus on the Intel Inside brand campaign. It's nice, and I'm sure some people will be moderately swayed by the brand name, especially given how familiar it is on the PC space. But fundamentally, the brand people care about when it comes to mobile devices is the manufacturer of the phone, not the chip supplier. In order to really succeed, Intel needs to woo the device manufacturers, who are not swayed by brand but by the quality and cost of the chips.

Conclusion

Right now, Qualcomm is the clear leader in the mobile chip space. Its CPU designs are modern, fast, and available today, so it has been gobbling up all of the design wins. In order to truly succeed here Intel needs to offer a better chip than all of its competitors, and the fiercest of them is Qualcomm. Can Intel do it? It's certainly not an outlandish thought, but Qualcomm is a company the size of Intel so it will very likely prove to be a much more formidable adversary than AMD, Cyrix, and Via ever were in the PC space.

Source: Qualcomm Publicly Backhands Intel - Technology And Brand Equity Observations