Intel’s New Best Friend May Be Google’s Worst Nightmare

Intel's future growth could come from software.

Mar 29, 2014 at 3:00PM

What do you call a company that dominates one industry that is slowly declining, while the industry that offers the most hope represents less than 10% of its business? Intel (NASDAQ:INTC).

Not that many years ago, Intel was one of the most loved technology stocks. The company spent billions more on research than its closest competitor produced in sales, and Intel was inside everything. Things have changed for the chip giant, but ironically, Intel's future could come from software, of all things.

Left behind by mobile
It's no secret that Intel has been largely left behind by the mobile revolution. If you need proof, consider that the Intel division that includes chips for tablets and smartphones generates just 8% of the company's revenue -- and this percentage is actually down from 9% two years ago.

Some of the biggest names in mobile aren't chip-related at all. Google (NASDAQ:GOOGL) has a commanding presence based on the Android operating system. Apple (NASDAQ:AAPL) sells more than 50 million iPhones and more than 25 million iPads in a quarter, and most people call it a "disappointment."

Even Intel's old bedmate, Microsoft (NASDAQ:MSFT), seems to have finally found the key to mobile growth. The company's Surface business more than doubled last quarter, and Windows Phone is on track to take market share over the next few years.

So how does Intel get back in the game? In the most unlikely way of all: a partnership with Samsung. To be more accurate, through Intel's membership in the Tizen Association.

A balancing act
Tizen was essentially born from a frustration with Google's Android dominance. Tizen's white paper says it best: "Tizen represents a clear opportunity to bring balance back to the mobile industry."

Some might believe that this refers to Apple, but that would be inaccurate. Though Apple sells millions of iPhones, the iOS system only held 12% of the global smartphone market at the end of 2013. On the other hand, Android carried a nearly 82% global market share.

The fact that Samsung shipped more than 32% of all global smartphones at the end of last year is hardly surprising. The success of Samsung has largely come on the back of Android. However, Samsung apparently isn't satisfied with the status quo. From a desire to break free of Google's influence, and a desperate attempt by Intel to gain relevance, Tizen was born.

The fastest-growing mobile software isn't Tizen, Android, or iOS
A few years ago, Windows Phone took a tiny percentage of shipments, and the real battle was between Android and iOS. According to IDC Research, that relationship has changed. Windows Phone is projected to move from 3.6% market share at the end of 2013 to about 7% by 2018.

Android and iOS are expected to grow by 11% and 10% annually through 2018, compared to a nearly 30% annual growth rate from Windows Phone. This should be great news for Intel, as the company has long counted on Microsoft for its dominance in the PC industry. However, most Windows Phone models still run on some version of the ARM architecture, which leaves Intel out in the cold.

Why Tizen?
As the two primary backers of Tizen, Samsung and Intel have very specific reasons to make this software successful.

  • First, out of necessity. Android dominates smartphones, and with the release of Android Wear for wearable devices, this dominance looks to continue as the mobile device landscape expands.
  • Second, Tizen software supports a program called Application Compatibility Layer, which allows Tizen devices to run Android apps with 100% compatibility and at native speeds. Having the ability to run hundreds of thousands of apps out of the gate is critical in mobile.
  • Third, Intel desperately needs Tizen to succeed. The company still gets more than 60% of revenue from PCs, and mobile devices are cannibalizing this business. As the only pure chip partner on the Tizen board and one of the two main forces behind the OS, you better believe that if Tizen becomes a new mobile force, Intel will be inside.

Samsung has already brought Tizen to the Samsung Galaxy Gear 2 and a few other devices. Now it's time for the OS to make a grand entrance. Intel is expected to announce its next generation of chips in the second half of 2014. Could these new chips power a lineup of Tizen smartphones? If Samsung and Intel have anything to say about it, the answer is likely yes.

Are you ready for this $14.4 trillion revolution?
Let's face it, every investor wants to get in on revolutionary ideas before they hit it big. Like buying PC-maker Dell in the late 1980s, before the consumer computing boom. Or purchasing stock in e-commerce pioneer in the late 1990s, when it was nothing more than an upstart online bookstore. The problem is, most investors don't understand the key to investing in hyper-growth markets. The real trick is to find a small-cap "pure-play" and then watch as it grows in EXPLOSIVE lockstep with its industry. Our expert team of equity analysts has identified one stock that's poised to produce rocket-ship returns with the next $14.4 TRILLION industry. Click here to get the full story in this eye-opening report.

Chad Henage owns shares of Apple and Microsoft. The Motley Fool recommends Apple, Google, and Intel. The Motley Fool owns shares of Apple, Google, Intel, and Microsoft. 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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.

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