At Intel's (NASDAQ:INTC) investor meeting, things were going extremely well throughout the day. Strategies presented by the heads of each of Intel's business units were on target, and it was clear that investors approved, bidding up shares nearly 3% in the Nov. 21 session.
But after market close, the company's CFO gave rather uninspiring guidance -- it looked like 2014 would be another flat year all around. While this was certainly discouraging from a shorter-term perspective, the long-term story for investors willing to wait at least a year has never looked better.
Intel demonstrates a 64-bit advantage
Ever since Apple (NASDAQ:AAPL) announced that iOS 7 and its A7 system-on-chip were 64-bit capable, the crowd went wild. Many believe that this is a marketing gimmick, and to some extent, it is. But in the highly crowded market of smartphones and tablets, companies need each and every leg up -- marketing or otherwise -- that they can get on their competitors. Samsung (NASDAQOTH: SSNLF), for example, has been vocal about how it would be releasing 64-bit versions of its apps processors in response to Apple's launch.
While the other chip vendors like Qualcomm appear to be at least a year out from 64-bit mobile chips, Intel's low-power processors have been 64-bit capable for quite some time. The only thing holding Intel back was Android support for 64-bit. Well, at the investor meeting, Intel's Hermann Eul demonstrated a Bay Trail-based system running a 64-bit version of Android -- a first in the Android space.
This could translate into significant design wins
Since Intel has articulated that it intends to sell 40 million tablet chips next year, fueled primarily by Bay Trail, it is clear that having 64-bit ahead of its rivals will be a major competitive advantage. Why? Well, many of the Android vendors will be looking for ways to differentiate in an already crowded Android space, and what better marketing feature is there than saying you have 64-bit support just like Apple does?
This could lead to a cascading effect that is a clear negative for the non-Apple -- and potentially non-Samsung -- ARM vendors who can't sell this feature. The possibilities for, say, an all-64-bit Google (NASDAQ:GOOGL) Nexus tablet lineup are rather distinct. Going a step further beyond tablets, it's also likely that this will help Intel's smartphone efforts on Android, which would also be marketable as 64-bit.
Now, it's not that simple
There's more to winning designs than just having the 64-bit marketing checkbox, although it will certainly hurt not to have it. A substantially better chip design, better pricing, or tighter integration are all considerations for the sale of these solutions that could counter the 64-bit bullet point. It's not a silver bullet.
But the thing is, Intel's tablet processors are rather competitive. If its road map for first half of 2014 is to believed, its offerings in the performance and mainstream segments of the smartphone space should also be quite top-notch, holding their own against Qualcomm's 28-nanometer lineup for vendors that don't absolutely need an integrated cellular baseband.
Intel is finally in the game and will continue to accelerate
Two years ago, everybody in the tech press was questioning if Intel could become a meaningful player in this space; now the only question that remains is, "How meaningful?"
The decline of the PC market certainly serves to dampen the progress that Intel is set to make in the smartphone and tablet spaces over the next few years, but it's clear that Intel is optimizing the PC segment for cash generation and investing in the other segments for growth.
The 64-bit advantage could very well manifest itself in the Android space next year. Keep an eye out for a Nexus 7 or 10 with a 64-bit Intel chip inside, running 64-bit Android, and likely touted as the world's first 64-bit Android tablet. It's not guaranteed, but if Intel's sales folks are doing their jobs, and if the partnership with Google is as strong as both companies tout, then it's extremely likely.