There's no doubt that Qualcomm (NASDAQ:QCOM) is one of the most dominant forces in the smartphone processor market, with its 48% of smartphone processor revenue. But the company only holds a small portion of the mobile processor market for tablets. Should investors be worried about Qualcomm's position, or is there more to this company than just smartphone chips?
We are mobile
Earlier this month, Qualcomm's CEO Paul Jacobs took the stage at the Consumer Electronics Show and announced that this is the era of "born mobile." Qualcomm may know more about mobile (revenue) than anyone else, considering the company makes about 3%-5% off the price of every CDMA-enabled device because of its patents and it collects almost half of all smartphone processor revenue. But smartphones and tablets aren't the same game, and Qualcomm's share of the tablet market is only 4%.
4% ain't that great
In the tablet processor kingdom, Apple reigns supreme. The Cupertino company has about 53% of the tablet processor market and shows no signs of slowing down. With strong sales from the iPad and iPad Mini, it's no surprise that Apple leads the market. In second place, with about 17% of the market share, is NVIDIA. The company has its processors in popular (or, at least well-advertised) tablets like Google's Nexus 7 and Microsoft's Surface. NVIDIA is a strong competitor and just released the next installment of its Tegra chip, which is expected to be 45% more powerful than its predecessor.
But even though Qualcomm is behind Apple and NVIDIA, the tablet market still in its infancy and it's not too late for Qualcomm to fight for more market share. More than $900 million in tablet processors were sold in Q3 2012, which is a 77% increase year over year. Qualcomm has its sights set on the premium and high-end tablet market with its recent release of its latest Snapdragon 600 and 800 processors.
To grab more of that market share, Qualcomm will need to convince tablet makers that its new Snapdragon processors are the best fit for their new devices. The new Snapdragon processor is 75% more powerful than its predecessor, can reach speeds up to 2.3 GHz and can handle Ultra HD recording and playback.
Qualcomm needs to show potential tablet makers that its chips have performed well in smartphones, and that the company can do the same in tablets. The current version of its Snapdragon processor powers three of the iPhone's strongest competitors: the HTC 8X, the Nokia Lumia, and the CDMA version of the Samsung Galaxy S III. If it can translate its success in smartphone processors to tablets, Qualcomm will have no problem growing its tablet market share, but with the chips coming out later this year, we may have to wait to see if they can pull that off.
Fool contributor Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends Apple, Google, and NVIDIA. The Motley Fool owns shares of Apple, Google, Microsoft, and 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.