Intel Opening Its Own Stores Is an Interesting Move

Believe it or not, Intel's (NASDAQ: INTC  ) brand is incredibly powerful among consumers. After all, those cute "Intel Inside" logos that adorn about 80% of PCs sold today don't go unnoticed. While the company is still fighting for market share in the smartphone and tablet spaces, there is little doubt that Intel's brand can, and will, go a long way to differentiating products based on its silicon going forward. OEMs competing in very crowded markets want every edge possible, and "Intel Inside" could eventually prove to be a meaningful weapon in the war against the likes of Qualcomm (NASDAQ: QCOM  ) .

Building on this brand, Intel announced that, for this holiday season, it would be setting up "Intel Experience" stores. These are similar to what Apple, Samsung (NASDAQOTH: SSNLF  ) , and Microsoft have been doing, but with a twist -- these stores will only be around during the holiday season. While the retail presence is integral to, say, the Apple experience, Intel is first and foremost a chip vendor. It's not trying to build its own products in an attempt to cut out OEM and ODM partners, but is instead trying to build the Intel brand and encourage shoppers to choose Intel-based products, no matter where they are shopping.

Intel's brand needs to go mobile
According to Interbrand's list of best global brands for 2013, Intel is still the ninth most valuable global brand. This sounds great, but the picture looks bleaker once you realize that Intel was the eighth most valuable brand during 2012 (Samsung stole Intel's spot). Intel's brand is powerful, but due to the lack of meaningful presence in the "hot" growth areas like smartphones and tablets (although this is changing) and the perception that Intel is a PC-oriented company (traditional PCs are no longer cool), it has remained stagnant while the mobile-levered tech players move up.

However, Intel is now a meaningful player in tablets and will continue to gain traction as its chips become increasingly potent. Over time, it should be a strong player in smartphones. For this holiday season, while Intel will also try to drive sales of its Ultrabooks, the focus is likely to be on Intel-based tablets. It would be nice if Intel and its partners could roll out Android-based tablets with Intel's latest "Bay Trail" system on chip. The key here is to convince customers that Intel-based tablets are the way to go.

The longer-term value of Intel's brand
While Intel's main rival, Qualcomm, enjoys a number of key technical advantages with its smartphone chips (in particular, more advanced cellular modem/RF technology), its brand is nowhere near as strong. For example, almost every Samsung phone with LTE sports Qualcomm Snapdragon silicon. Further, some of the most popular tablets (like the Google Nexus 7 and the Amazon Kindle Fire HDX) also sport top-notch Qualcomm chips. The brands in focus for these devices are the device/ecosystem vendors themselves, not the chip vendors.

A major advantage that PC OEMs have traditionally had is that they are able to leverage the Intel brand (via the "Intel Inside" stickers) to help drive consumer awareness and interest. Not too many folks know or even care about Acer or ASUS, but when they see the Intel Inside sticker, they're often inclined to take a closer look at those devices and judge them objectively.

This has some very obvious implications. While Intel is a component vendor and OEMs will weigh technical merit very heavily in selecting processors for their products, the Intel brand can also be thought of as a "scale tipper" in the case of two compelling products at equally compelling price points. After all, if the device vendor can get more marketing/brand muscle behind it in the difficult fights against Samsung and Apple, then why not?

Foolish bottom line
If you believe Interbrand's rankings, Intel can be a very powerful ally to device vendors not named Samsung or Apple. Intel's tablet silicon is already excellent and winning designs left and right, and once Intel's smartphone chips are up to speed (they're not today), it's likely that device vendors will be eager to use Intel silicon, if only to get a leg up thanks to the Intel brand. Intel's "experience stores" just further Intel's already strong brand, and it is a better use of marketing dollars than those silly Wild West Ultrabook ads.

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 17, 2013, at 6:59 AM, rocket7777 wrote:

    Chips are not important to people. This is why apple uses samsung's chip and samsung uses other people's chip.

  • Report this Comment On November 17, 2013, at 2:20 PM, slapppy wrote:

    Samsung Fab Factory are hired to mass produce the A7. The A7 is Designed, Engineered by Apple. Samsung is used as cheap labor to build the Apple Designed and Engineered Custom for Apple only A7 Chip. Get your facts straight as this has been confirmed by reputable sources. Unlike trollers and iHaters posting such drivel online.

  • Report this Comment On November 18, 2013, at 1:25 AM, doawithlife wrote:

    I was an AMD fan for a long time(computer I am typing this on has an AMD 1100t).

    While slightly more expensive, Intel now has many things that make me look that way.

    1. Much of the manufacturing stays in the US.

    2. Intel now has the lowest power x86 cpu's for PC's (or pc/tablets or laptops - qualcomm and Nvidia make ARM cpu's which are not PC cpu's).

    3. Intel now makes everything from motherboards to SSD. Meaning you can make very compatible computers that have less bugs.

    4. The Intel onboard graphics are top notch. HD5000 series (found in Apple products) can run every game on the market. The HD4400 (found in Surface Pro 2) can as well, but the HD5000 is a real champ.

    Anyrate, if you want a mobile work device that is also a toy. x86 Intel inside means something.

    If you want a mobile device that is only a toy, buy a Qualcomm or other ARM chip.

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