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Initial Thoughts on Intel and the Burgeoning Markets for Tablets and Smart Phones

|Includes: ARMH, Intel Corporation (INTC), NVDA, QCOM, TXN


Today a flurry of news descends regarding Intel and its command of core and emerging markets.  Our colleague in  Seeking Alpha (David Zeiler) writes of the promise offered in Intel’s Light Peak data transfer technology, which it hopes will ultimately supplant USB x.0 as the primary PC-centric connect technology.  And both he and others comment of Intel’s newly energized rivalry with ARM and its partners in the Tablet and Smart Phone markets.


Indeed, Light Peak, which offers initial transmission rates twenty-five times the existing USB rate, is today being re-branded “Thunderbolt” with its release by Intel and Apple, which is going to include it in its new line of MacBook Pro laptops.  With a rate of 10 Gbps, it permits the transfer of a full-length HD movie in about 30 seconds, surely a benefit to the power-users’ movie viewing.  And it speaks to Intel’s command of the full reach of technologies that enable PC- and Server-centric computing as testimony to its prowess.


It has always been a challenge to Intel to extend this leadership in semiconductor design and process capabilities beyond PC-centric computing. And this too is a theme of the day. With last week’s Mobile World Congress still fresh in our minds, we see Intel’s relative absence from burgeoning markets for the Smart Phone and super-sized counterpart, the Tablet. For in this exciting extension of the mobile phone market, ARM-based processors of Broadcom, TI, Qualcomm and others dominate. And Johnny-Come-Lately Intel is seen as an outcast, at least for now.  In fact, because Tablets are displacing Netbooks, the momentum of Intel’s Atom processor line has indeed diminished. Further muddying the waters was Nokia’s selection of Windows Phone 7 for future Smart Phone offering, which appears to strand its alliance with Intel around Meego.


What is this woe unto Intel, one might ask? In my view, it is early skirmishing at the very periphery of Intel’s PC-centric universe. Surely it is Apple’s iPad this is driving the Tablet market and its key attribute is that its design is so perfectly mated to its function.  To fully leverage the power efficiency of this new platform, Apple selected and application specific ARM-based processor not too far removed from that in its iPhone. For it is not truly a computer per se, but an Internet access device that can run custom apps and access the network via a Wireless LAN (for the in-home user) or a Wireless Carrier (for the mobile user). It is not really a computer at all, but an access device.


So there it is. In this game we are in the earliest inning and the teams appear to be aligned along their strongest axes.  Still, situated as it is between the mountain-like realms of the PC and Handset, this exciting new market for Mobile devices is likely to admit a variety of capabilities and variants. And we can be sure Intel will be there with a variety of offerings as it develops.