Don't let it get away!
Keep track of the stocks that matter to you.
Help yourself with the Fool's FREE and easy new watchlist service today.
Consumers today have become very tech-savvy and have become more educated about the technology that powers their hi-tech devices such as tablets and smartphones. Early adopters of new technologies tend to be very concerned about what's inside their devices. While Apple and Samsung have managed to cement their dominant positions as highly recognizable household brand names in the mobile computing arena, Qualcomm (NASDAQ: QCOM ) , the company that designs smartphone processors, has flown under the radar and remained largely unknown to the average consumer.
In contrast, Intel (NASDAQ: INTC ) is a well-known consumer brand in both the PC and server markets. Intel has built its brand after many years of investments in innovative marketing. The powerful brand has been successful in influencing consumers' purchase decisions, mainly based on the PC manufacturer's use of Intel processors, rather than the manufacturer's own logo. Although Intel has been late to the mobile processor party, its higher brand recognition might help it successfully compete with Qualcomm and other dominant players such as MediaTek and Broadcom.
Lower brand recognition
Despite Qualcomm's huge lead in 4G LTE and mobile chipsets, the firm's Achilles' heel remains its lower brand recognition compared to the smartphones it powers. The company needs to emerge as a dominant consumer brand from its relative obscurity. Qualcomm's lower brand recognition might soon start to impugn on its bottom line by giving rivals a chance to grab market share, and also reduce its ability to charge premium pricing on its products.
Mobile chipset battle heats up
Although most observers talk about Apple, Samsung, and Android when defining the mobile device battle, it really boils down to the company with better brand recognition, rather than the one that builds the best integrated Systems-on-a-Chip, or SoC. SoCs are critical in determining a mobile device's capability. Success in designing great SoCs is synonymous with success in the mobile chipset battle.
Intel moved quickly this year to backfill its 4G LTE engineering design capability and intellectual property. Intel acquired Infineon Wireless in 2010, a baseband modem and fabless semiconductor company with a proud history of delivering great baseband modems to mobile handset and base-station manufacturers across the globe. Intel gained a substantial portfolio of patent protection with the acquisition.
Intel recently launched the Bay Trail tablet SoC, which has been well-received. But, Qualcomm has continued to dominate the smartphone chip market because manufacturers favor suppliers that can offer both processor SoCs as well as baseband modems. The delivery of 4G LTE to smartphone manufacturers remains critical for Intel.
Intel launches first multimode LTE modem
Intel's Oct. 30, 2013 launch of its much-awaited LTE modem, targeted at tablets and smartphones, might prove to be a decisive game-changer. For the first time, Intel poses a credible challenge to Qualcomm's dominance in the 4G chipset market.
Although Intel had launched its first LTE modem last year, it proved to be a one-trick pony that supported 4G networks, but offered no 2G and 3G support. Compatibility with 2G and 3G is critical since most countries around the world, including the U.S., are yet to fully upgrade to 4G. Intel's new XMM 7160 chip not only links to 15 Global LTE bands, but also supports both GSM and HSPA networks. The chip even supports voice-over-LTE, or VoLTE. Intel has already shipped the modem to Europe and Asia for use in new editions of the Samsung Galaxy Tab 3.
More importantly, Intel has not just built a one-off product, but developed a product pipeline as well. The firm plans to ship more advanced modems in 2014 that support new LTE-Advanced techniques, such as the carrier aggregation and TD-LTE networks that are used by leading telecom players like China Mobile and Sprint, as well as as a host of other global carriers.
Despite the huge stride Intel has taken with that launch, it has not fully caught up with Qualcomm, since the latter remains the sole maker of fully integrated SoCs that combine a baseband modem with an applications and graphics processor. Fully integrated SoCs are mainly used in mid-range smartphones. Qualcomm is, therefore, likely to continue dominating the mid-range smartphone chip market in the near-term.
Qualcomm moves to improve its brand-recognition
Both brand recognition and superior products are critical for winning today's smart devices chipset battle. Qualcomm has been lagging behind as far as brand recognition is concerned, but has lately been making more concerted efforts to turn that around.
According to Ad Age DataCenter, Qualcomm spent more than $9 million during the first half of 2013 on media measure, more than triple the $2.49 million it spent in the first half of 2012. This will increase the firm's media presence. The company also recently launched its first corporate image agency, DDB San Francisco.
The other activities that the firm has been undertaking to improve its brand recognition include the launch of a branded tech blog, Facebook campaigns, native ads, a partnership with Major League Baseball aimed at enhancing smartphone connectivity in baseball ballparks, integration with blockbuster sci-fi movies, and a commercial for its popular Snapdragon processors featured during the 2013 NBA finals. Despite these bold moves, it will be years before Qualcomm can enjoy brand recognition similar to Intel's.
Intel's better brand recognition might soon prove to be decisive in the race for a bigger mobile chipset market share. The company recently demonstrated it can design good tablet chips, and might soon be giving Qualcomm a run for its money, perhaps sooner than many think.
A tech stock to keep forever
As every savvy investor knows, Warren Buffett didn't make billions by betting on half-baked stocks. He isolated his best few ideas, bet big, and rode them to riches, hardly ever selling. You deserve the same. That's why our CEO, legendary investor Tom Gardner, has permitted us to reveal The Motley Fool's 3 Stocks to Own Forever. These picks are free today! Just click here now to uncover the three companies we love.