HP (NYSE:HPQ) announced this week that it's getting back into the mobile game by working on a high-end Android-based tablet. NVIDIA's (NASDAQ:NVDA) been unofficially named as the processor supplier for the tablet, which would be the first device to use its Tegra 4 chip. Both have much to gain from the tablet -- if HP can make it in the mobile world.
New tablet, new opportunity
HP set up its new mobility division late last year to focus on consumer tablets and other mobile offerings, and it looks like this new announcement is the company's first fruits of the division. The new tablet will push HP into new mobile territory, something it hasn't excelled at in the past.
When HP launched its TouchPad two years ago, the company hosted a huge press event to drum up excitement, but then launched the product six months later. All the press attention had died down and the TouchPad went on sale with no real interest from consumers. Soon after, HP canceled the TouchPad, along with the webOS running it, and sold off the remaining tablets for less than a $100 each.
But the newest tablet isn't just an opportunity for HP; it's also a boost for NVIDIA as well. Last month, NVIDIA showed off its new Tegra 4 chip at the Consumer Electronics Show in Las Vegas. The company claims the new Tegra chip is the world's fastest processor, but it's not expected to show up in any tablets until later this year.
NVIDIA isn't new to the mobile processing world. The current Tegra 3 processor can be found in notable mobile devices like the Motorola MMI Droid X2, HTC One X, Google's Nexus 7 and the Windows RT Surface tablet. But launching the new HP tablet with a brand-new NVIDIA processor may push both companies further into the right direction. HP needs to compete in the mobile space, and NVIDIA wants to grab more mobile processing market share.
NVIDIA currently comes in second place in tablet processor market share with 17%, behind Apple's 53%. NVIDIA's Tegra Group, which focuses on its Tegra chips, grew 90% year-over-year this past quarter and brought in $208 million in revenue. But some analysts are worried that NVIDIA won't be able to gain more mobile market share in such a competitive environment.
The (possible) road ahead
NVIDIA already has more than a foot in the tablet processor door, but Intel, AMD, and Qualcomm aren't sitting idly by while mobile explodes. NVIDIA needs to grow its tablet and smartphone chips sales to ensure it can stay ahead of the pack. With PC juggernaut like HP using a Tegra chip, NVIDIA may find a good partner going forward. The PC maker knows how to sell products. HP sold more than 56 million PCs -- a 16% market share -- in 2012. But as HP has already learned, mobile is a completely different space.
That's why investors need to see the Tegra 4 chip in as any many tablets as possible. With so many Android-based tablets on the market, NVIDIA is just one processor maker among the crowd. Investors should look for continued strong growth from NVIDIA's Tegra division and more tablets and smartphones adopting the Tegra line. The new HP tablet using the Tegra 4 chip is a step in the right direction, but the mobile revolution is just under way and it's going to be a long road.
Fool contributor Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends Apple, Google, Intel, and NVIDIA. The Motley Fool owns shares of Apple, Google, Intel, 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.