Can Qualcomm Hold Off Intel and Microsoft?

Qualcomm (QCOM 1.88%) will release its quarterly report on Wednesday, and shareholders have been pleased to see the chipmaker's stock hit levels not seen since the tech boom more than a decade ago. Even as rival Intel (INTC 1.20%) starts to tap more heavily into the mobile-chip arena by playing a vital role in Microsoft's (MSFT -0.26%) new higher-end Surface tablets, Qualcomm still believes that its competitive advantage can endure even as the fight gets fiercer.

Qualcomm has built its business on the mobile revolution, leading the way in providing mobile-applications processors and cellular platforms to major mobile-device manufacturers. With a huge treasure trove of intellectual property at its disposal, Qualcomm makes money from royalty payments on everything from the highest-end technology to the more-established patents that developing and emerging markets are only now starting to use extensively. NVIDIA (NVDA 0.40%) has done a reasonably good job competing against Qualcomm. Yet by contrast, Intel and Microsoft haven't yet taken full advantage of the mobile revolution, and they're looking to upend Qualcomm's domination with competitive strategies of their own. Let's take an early look at what's been happening with Qualcomm over the past quarter and what we're likely to see in its report.

Stats on Qualcomm

Source: Yahoo! Finance.

How will Qualcomm fight Microsoft and Intel?
Analysts have mostly kept their views on Qualcomm earnings stable in recent months, although they've boosted their fiscal 2014 projections by about half a percent. The stock has done quite a bit better, though, climbing another 8% since early August.

Qualcomm started the quarter on the right foot, setting high expectations for its full-year earnings and revenue. Demand in the mobile market keeps rising steadily, and with its chips prominently featured in several important high-end Android devices, Qualcomm is counting on continuing success in smartphones and tablets to drive future growth both this year and beyond.

Even with its established place in many popular products, Qualcomm has kept on earning new victories. The new Nexus 5 smartphone has emerged to rave reviews, using a Qualcomm Snapdragon 800 processor and other chips in its design just as the company's chips were present in the previous Nexus 4 version of the phone. The chipmaker has generally done a good job of retaining and building on existing customer relationships, building loyalty that will make it harder for Intel to compete against Qualcomm.

Moreover, Qualcomm has no love lost for Microsoft. Even as Microsoft has turned to NVIDIA to power its Surface 2 tablet, Qualcomm has argued that its Lumia 2520 Windows tablet performs better than the Surface 2. That has helped Qualcomm gain spots in the Kindle Fire HDX model at NVIDIA's expense and could further lock out Intel in the future, despite its Haswell processor's spot in the new Surface Pro 2.

Meanwhile, Qualcomm's ambitions for the future are huge. CEO Paul Jacobs sees mobile technology playing a role in everything from medicine to virtual-reality-like interfaces between the physical world and the Internet, with the potential for products like wearable computing devices and other mobile-savvy inventions transforming the world. You can expect Qualcomm to keep aiming at being a big player as those trends develop.

In the Qualcomm earnings report, watch to see whether Intel's efforts are having any marked impact on Qualcomm's growth. Until Intel demonstrates lasting success, Qualcomm should be able to continue its ascent unimpeded by its competitors.