What Does Intel Have Up Its Sleeve?

This month marks a milestone for chip juggernaut Intel (NASDAQ: INTC  ) . The largest chipmaker in the world by revenue has transitioned to new CEO Brian Krzanich, following the planned retirement of Paul Otellini. One of the most important tasks that Krzanich is faced with will be positioning Intel within the mobile market, an area that Otellini fumbled even as the outgoing exec had his fair share of accomplishments as well.

To that end, Krzanich has reportedly set up a "new devices" division in an internal reorganization. That could mean almost anything, and there's not much other detail surrounding the leaked memo. For context, Intel currently has five operating segments: PC client group, data center group, other Intel architecture, software and services, and all other.

Segment

Revenue (MRQ)

% of Total Revenue (MRQ)

PC Client Group

$8 billion

64%

Data Center Group

$2.6 billion

21%

Other Intel Architecture

$978 million

8%

Software and Services

$588 million

5%

All other

$437 million

3%

Total

$12.6 billion

100%

Source: 10-Q. MRQ = most recent quarter. Figures may not sum because of rounding.

The PC and data center segments tend to generate all of Intel's operating income. The focus on getting Intel silicon into new devices is also precisely what helped Krzanich score the top position, according to The Wall Street Journal. Intel Chairman Andy Bryant was quoted as saying that the pitch "absolutely" helped Krzanich become CEO.

We're not just talking about traditional mobile devices like smartphones and tablets either. "New devices" could include entirely new product categories like wearable devices, among others. The highest-profile wearable device en route to market is Google (NASDAQ: GOOGL  ) Glass. The high-tech spectacles strangely use a Texas Instruments OMAP processor, even after TI famously ditched mobile last year.

Still, Google has expressed openness toward using Intel's chips, optimizing Android for the company's x86 architecture a couple of years ago. That partnership hasn't translated into meaningful smartphone wins, even though Intel has a couple of Android devices under its belt now. Like most things, Google is relatively agnostic and just wants to broaden its reach by whatever means necessary.

Apple (NASDAQ: AAPL  ) is also expected to get into wearable devices soon with an iWatch. Rumors surfaced late last year that Intel and Apple were collaborating on a smart watch. The odd part about that rumor is that Apple has also allegedly explored moving Macs away from Intel chips in favor of its own designs. An Intel-powered iWatch is a possibility, even if a remote one.

Will Krzanich's mark on Intel be broadening the company's horizons to new product categories?

When it comes to dominating markets, it doesn't get much better than Intel's position in the PC microprocessor arena. However, that market is maturing, and Intel finds itself in a precarious situation longer term if it doesn't find new avenues for growth. In this premium research report on Intel, a Motley Fool analyst runs through all of the key topics investors should understand about the chip giant. Click here now to learn more.


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  • Report this Comment On May 23, 2013, at 8:11 AM, doawithlife wrote:

    I know the first real phone/computer hybrid comes out in about 6 months. Suppose to have 1.2-1.8Ghz dual core Intel Atom CPU and able to run Windows XP 64-bit through Windows 8.

    I would guess that is at least part of it.

    Intel has a hard job. Every new generation of CPU not only gets faster but they are built on a thinner wafer. Every time the CPU gets thinner they pretty much have to build an entirely new factory. They just built a factory capable of making fast/low power X86 CPU's for phones. Until now all phone CPU's have been ARM based, Intel now opens the door for Mac OS, Linux, and full Windows OS Phones. Iphone and Android may become a thing of the past(actually the reason Windows went with Metro - they expect full Windows to run on phones soon).

  • Report this Comment On May 23, 2013, at 9:15 PM, techy46 wrote:

    Umm, Windows Phone 8 is full Windows already. It's going to be really interesting to watch device commoditization of mobile PC's blow away this whole The PC's Dead fairy tale.

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