The harsh truth is that Intel (NASDAQ: INTC ) is unlikely to sell chips into the iPhone (barring a cellular baseband design win). On top of that, it is not yet clear whether Intel has a clear path to selling chips into various Samsung (NASDAQOTH: SSNLF ) devices. While a truly excellent solution would likely get some wins at Samsung and others, what Intel really needs is a "friend" in the smartphone world.
Motorola Mobility was pretty friendly
Interestingly enough, Intel and Motorola Mobility (before it was acquired by Google (NASDAQ: GOOGL ) ) signed a "multi-year, multi-device agreement." More than a year has gone by since the original Motorola Razr I (which featured an Intel processor) hit the market, potentially signaling that this deal became null and void when Motorola Mobility was acquired by Google. However, it could just be that none of Intel's chips for phones released since then were competitive.
Now, it has never looked as though Google and Intel were on bad terms; quite the contrary, as Intel seems to be a fantastic partner in supporting both the Chrome operating system as well as Android. Furthermore, Google buys quite a few Xeon processors from Intel to power its data centers. So, Google, while probably closer to the neutral side of "friendly" is still friendly. Lenovo (NASDAQOTH: LNVGY ) , on the other hand, is quite a different story.
Lenovo and Intel are very friendly
In a recent interview with Engadget, a Lenovo executive was particularly bullish on Intel's long-term prospects in the mobile-chip market, having the following to say on the matter:
You really need to pay attention to Intel. I think that someday they will be a major player in this phone ecosystem. On the PC side, they just build the densest, lowest power-consumption, best chips in the industry; they have the fabs; they can build the things. My understanding is that they have more engineers working on Android than Google does now. They are very, very serious. So, you know, keep an eye out.
So, while Samsung may be reluctant to use Intel's chips and while Apple certainly won't, Lenovo -- which is growing is presence in phones like a weed -- will...if Intel can provide products that are competitive. It also seems unlikely that Lenovo will build its own chips (despite the reports that Lenovo has hired a handful of chip engineers), particularly as the merchant ecosystem (including Qualcomm (NASDAQ: QCOM ) , Intel, etc.) is quite literally investing billions per year to develop mobile chips (and right now the merchant ecosystem is producing some exceptional products.)
This is Intel's best shot
At the end of the day, Intel just needs to gain a foothold. If it can design best-in-class mobile SoCs by leveraging its immense design experience and its leading edge manufacturing, then it could eventually become a powerful player in this space. However, it's tough to gain traction when you don't have any competitive products to sell, and this has been -- more than anything -- an execution problem on Intel's part.
The company's next generation Merrifield platform should launch at Mobile World Congress, but it is unlikely that this platform will gain too much traction (since the XMM 7160 modem it is paired with isn't particularly good, and a dual core chip is unlikely to look good from a marketing perspective). All eyes should really be on Intel's next generation 22-nanometer smartphone platform, code named Moorefield, paired with the much more competitive XMM 7260 modem, which should be available in roughly the third quarter of 2014 period.
Lenovo buying Motorola Mobility and really expanding its presence as a leading smartphone vendor is a boon for Intel, and more broadly, the merchant-chip ecosystem. While Apple is married to its own designs, its market share isn't really large enough to cry over. The big issue is Samsung owning 30% of the market, something that Intel, Qualcomm (even though it is a supplier to Samsung today), MediaTek, and others should work to displace by enabling vendors less likely to try to do their own chips.
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