The case can easily be argued that Intel (NASDAQ:INTC), although the largest processor manufacturer in the world, missed some of the early stages of mobile. This allowed Samsung and Qualcomm (NASDAQ:QCOM) to snatch up most of the mobile territory.
It's not completely fair to say Intel doesn't have skin in the mobile game -- it definitely does -- but it's not a stretch to say the company's definitely not influencing the mobile market. The great thing about the tech sector, though, is that new innovations are never far behind. The chipmaker knows the wearable wave of tech is about to hit, and it's trying to position itself to ride that into additional revenue. But there's some major competition in the space, and Intel's certainly got its work cut out for it.
Riding the wave of wearables and more
At the Consumer Electronics Show this past week, Intel CEO Brian Krzanich showed off a few of the company's wearable innovations like earbuds that sip power from the headphone jack and adjust the music being played based on the speed of your heart rate. There was also a smart watch for kids equipped with geofencing technology that parents could presumably use in safely keeping tabs on their kids.
But the tech Intel displayed was more about showing the capabilities of the company rather than showcasing cool new ideas. The real story behind Intel's push into wearables lies within a chip called Quark -- a small system on a chip with big opportunities. The company debuted Quark back in September and revisited its capabilities at CES.
In order to power the future of wearables, original equipment manufacturers will need to tap processing units that fit into small spaces and sip power. That's why Quark is so impressive. Krzanich has said the processor is 10 times as powerful as the company's Atom chip, yet it's five times smaller. To show off just how small, Intel put the processor on the Edison development board and crammed it into the size of an SD card. The company said Edison, with Quark, "can be designed to work with most any device -- not just computers, phones, or tablets, but chairs, coffeemakers, and even coffee cups."
Which leads us to Quark's massive potential -- the Internet of Things. Sure, consumer-side gadgets like connected glasses and smart watches get a lot more attention; they're fun and exciting to think about so that's understandable. But embedding silicon into simple items around the house so that they can communicate with you and other devices is fascinating in its own right, and is poised to be a massive industry.
Think of tiny Quark chips embedded into the energy, transportation, and industrial sectors, allowing machines, goods, and manufacturing systems to communicate with one another. Automobiles are already working toward this with vehicle-to-vehicle communication, and other sectors are following right behind.
International Data Corporation estimates that by 2020, technology and services spending related to the Internet of Things will generate $8.9 trillion in revenues. IDC also expects the "installed base of the Internet of Things will be approximately 212 billion 'things' globally by the end of 2020." That's a new massive opportunity for companies that correctly position themselves right now.
But Intel doesn't have a dominant position in the Internet of Things; it's far too early for that. Qualcomm is already one of the most dominant players in the mobile space, and the company wants to pivot that into pursuing the Internet of Things. Not only does it supply baseband chips and processors for a large part of the mobile industry, but it also just released an open-source operating system that could be the foundation for connected "things" to talk to each other. It's AllJoyn software can be placed on top of existing platform software to allow devices to easily communicate with one another.
Qualcomm's advantage is that it already knows the mobile space and it's opened its software up for other OEMs to use as well. In order to get its processors into everyday connected devices the company has made a pre-emptive move by making it easy for other companies to use its software -- and, hopefully, use its chips as well.
Other chipmakers like NVIDIA will likely pose a threat to Intel as well. NVIDIA already supplies processors for many automotive technologies and that experience could give the company an advantage in working outside of the confines of traditional mobile technology. The good news for tech investors interested in the Internet of Things is that the industry is wide open right now. It's up to all of these companies to determine just how far they'll ride this coming technological wave, and it's really anyone's game at the moment.
1 stock for the Internet of Things
Predicting the future of Internet of Things obviously isn't easy, and it's hard to determine which company will come out ahead. But The Motley Fool's chief investment officer thinks there's one stock that's positioned far better than the others, and it's probably not one you've heard of. He's so confident in this company that he's made it "The Motley Fool's Top Stock Pick for 2014." To find out the name of this under-the-radar company, and to get the special free report, just click here now.
Fool contributor Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Intel. It recommends NVIDIA and owns shares of Qualcomm. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.