One of the biggest smartphone wins for Intel (NASDAQ:INTC) last year was the Lenovo (NASDAQOTH:LNVGY) K900. This phone was a gorgeous design – a 1920x1080 screen, a reasonably fast Intel Atom Z2580, and superb build quality, all running Google's Android. This was a device that not only proved that Intel's chips could run Android well (a big concern at the time) but that they could do a system-on-chip low power enough for mainstream phones. With things going seemingly well with Lenovo and Intel, Lenovo's updated version of the K900 – known as the K910 – sports a Qualcomm (NASDAQ:QCOM) Snapdragon 800. Does this mean that the Intel/Lenovo smartphone relationship is getting rocky?
Explaining Lenovo's "switch"
There's no denying it – Qualcomm's Snapdragon 600 and 800 lines of processors have really been cleaning up in the mobile space. As far as merchant chips for phones and tablets go, they're the cream of the crop from both a CPU and graphics standpoint. In addition, Qualcomm is the only player today offering an LTE-Advanced cellular solution – something that Intel won't be able to provide until the first half of 2014. Quite frankly, as far as high end smartphone processors go, only Qualcomm really has a viable solution today, so for an updated, high-end phone, Lenovo didn't have a choice.
Intel will have its next generation smartphone processor and LTE solution, codenamed "Merrifield," available by the end of the year for designs that will crop up in the first quarter of 2014, so Intel will have a chance to fight (and even win) Android phones that matter – Lenovo's next generation devices included.
Not a big deal for Intel
In fact, in addition to the fact that Intel lost this one by default, it's not exactly a new trend, and it certainly doesn't mean that Intel can't win future phones from Lenovo. Indeed, Intel won the Lenovo K800 with its original "Medfield" chip, but then the successor – the K860 – came packed with a Samsung Exynos 4412 Quad. Then, shortly after that, Lenovo launched its K900 with the Intel Atom Z2580. So, who's to say that when Intel launches its "Merrifield" chip that a potential K1000 (or something similar) couldn't go back to Intel?
What this does mean, though, is that Intel needs to make sure that it needs to execute to a more aggressive roadmap. While losing the next generation Lenovo flagship phone certainly doesn't mean that it can't win it back, it would be much better for Intel and its investors if the company would iterate its chips at a more brisk pace so as to win design after design uninterrupted. With the new roadmap in place, it seems that Intel is doing it, but Wall Street will need to see hard evidence before it is truly convinced.
Foolish bottom line
The smartphone chip industry is highly competitive and the OEMs will choose the best part for the job. For the launch timeframe for the Lenovo K910, Qualcomm simply had the best (only?) high-end solution, and as a result it won the socket. This doesn't mean that the Lenovo/Intel relationship is in trouble, nor does it mean that Intel can't win the socket back with its next generation chip, but what it does point to is a need for Intel to execute swiftly on its roadmap going forward. Its "Merrifield" chipset will give it a great start, but the key to winning this battle is to deliver year after year on both apps processor and modem.
Ashraf Eassa owns shares of Intel. The Motley Fool recommends Google and Intel. The Motley Fool owns shares of 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.
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