Intel: Big Winner In The War Between Chromebooks And Cheap Windows Notebooks

Motek Moyen profile picture
Motek Moyen
6.77K Followers

Summary

  • Samsung’s decision to use a x86 processor for its new Chromebook 2 product is another big win for Intel. Unlike tablet chip sales, notebook chip sales might be profitable.
  • The rapid increase in popularity of Chromebooks has forced Microsoft to lower its Windows licensing fees. Hewlett-Packard and Acer already sell sub-$200 Windows 8.1 notebooks.
  • Notebook sales are still very important for Intel.

Intel (NASDAQ:INTC) sold 15 million tablets in Q3 2014. However, the company's mobile chip division posted another $1.04 billion in operating loss for Q3. While the management is promising significant reduction in contra revenue next year, x86 mobile chips will remain a money-losing enterprise. It is therefore welcome news that Samsung (OTC:SSNLF) decided to use an Intel Celeron N2840 for the latest version of its Chromebook 2. Previous versions of Samsung's Chromebooks used tARM-based Exynos processors. Samsung's decision to use an x86 processor is a long-term tailwind for Intel. Tablet sales growth is slowing down but Chromebooks are rapidly gaining popularity. Gartner estimated that tablet sales only grew 11% in Q3 2014, which is far lower than the 55% growth it posted in the same period last year. ABI Research says Chromebook sales grew 67% in Q3 2014. Gartner estimates that more than 5 million Chromebooks will be sold this year, more than 70% greater than the units sold last year. Yes, the tablet market is much bigger than Chromebooks right now. However, Intel is losing big money in its quest to sell 40 million tablet chips this year. Chromebook sales are therefore more beneficial to Intel than tablets are right now. Thanks to Intel's strong support, sub-$250 Chromebooks are now proliferating in the market. Samsung is selling the Intel-powered 11.6-inch Chromebook 2 for $249.99 - $50 cheaper than its previous Exynos-powered Chromebook 2.

Cheaper Intel-Powered Chromebooks

The lower price tag of the Intel-powered Samsung Chromebook 2 might help the South Korean company regain its position as the world's top vendor of Chromebooks. Samsung posted 64.9% market share in Chromebook sales in 2013. However, low-priced Intel Celeron and Atom processors helped other OEMs come out with cheaper Chromebooks this year.

Figure 1. Vendors' Market Share in Chromebooks by end of 2013

This article was written by

Motek Moyen profile picture
6.77K Followers
I am 100% Filipino, with 25% maternal Chinese blood. My background is 20 years in the creative/advertising industry. I am a very bad writer, but please refer to my TipRanks history, or do a manual curation of my investing ideas here at Seeking Alpha. You will know that my stock picks are mostly winners. I like technical indicators and the Piotroski F-score is usually my no. 1 factor when evaluating the investment quality of a stock. My 90s college adventure involved wasting time in B.S. Mathematics, Diploma in Commercial Advertising, and B.S. Computer Science.I am a well-trained computer technician, video editor, game content creator, web developer, graphic/UI designer, and social activist. I will start learning C# in early January 2023. If I can't learn doing production-level Blazor apps by end of June 2023, I will just go back to improving my Python skills. I am too old and sick to be learning a new programming language like C#. I DO NOT gamble/invest on U.S. stocks. My right lung problem has given me a bad heart. I'm not fit enough to do stock trading.

Disclosure: The author is long INTC, AMD. Disclosure: The author is long INTC, AMD. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

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