When it comes to competing in a highly competitive market with a relatively low barrier to entry, there's not much that's more important than the value of a brand. Whether in fashion or technology, a brand that customers know and trust can be the difference between a winning product and a commercial flop. This is especially true in the smartphone market, where Samsung's (NASDAQOTH:SSNLF) relentless spending on marketing has allowed it to command the vast majority of the profits to be had in the Android smartphone space -- even as it competes against the mighty Apple.
Intel and Google: a match made in heaven
It has been interesting to see that despite Google's (NASDAQ:GOOGL) superb efforts to build one of the world's most popular operating systems, it has been Samsung that has reaped the benefits of Google's labor. It doesn't seem that Google minds too much that Samsung has been profiting handsomely from Google's efforts. But with full rights and control of the platform, it would make sense that Google would want to find a way to really take Motorola Mobility to the next level as one of the premier handset vendors.
In order to really take it to the next level, Google will need plenty of marketing muscle. Motorola is a pretty strong brand, and Google is certainly a well-known name -- after all, who hasn't used one of Google's many services. But taking the fight to Samsung and Apple is not going to be easy.
It's going to take a combination of world-class technical expertise, a deep understanding of consumers, and -- probably most importantly -- incredibly strong brands that resonate with customers. Is there a chip vendor anywhere that has one of the world's most valuable brands, significant technical might, and a real hunger to get into the smartphone space, where it had previously been absent?
Of course, the name that really fits this bill is Intel (NASDAQ:INTC). Sure, the investment community is gaga for names like Qualcomm (NASDAQ:QCOM), the company that powers the vast majority of handsets today -- the "Intel of smartphones," if you will -- and ARM, whose IP is in just about every smartphone/tablet today.
But how many consumers really know about these companies? Just about every PC has "Intel Inside," and there's a gorgeous little sticker to really let customers know. And Intel spends a non-trivial sum actively promoting its brand. While Qualcomm's sales, general, and administrative spending came in at a mere $2.52 billion over the last 12 months, Intel's was a whopping $8.04 billion. That's a lot of marketing and brand-building on Intel's part that customers can -- and will -- leverage.
So, when Intel has the right products for tablets and phones and can drive leadership there, isn't it likely that Intel will start making some sweet deals for its chip customers on the marketing side of things? Is it really so tough to envision Intel going all-out to promote Google/Motorola phones with "Intel Inside?"
The other handset vendors wanting a piece of that action -- particularly the ones sick of Samsung hogging all of the profits in the space -- will want the support of the Intel marketing machine. It's not tough to see that this means very good things for Intel long-term, even if the company is having short-term pains getting the right products in place.
Foolish bottom line
Intel has a lot of assets that extend beyond the technical. Its brand is the ninth-most valuable in the world, according to Interbrand. It's just behind Samsung, and no other smartphone chip company even makes the list. To think that Google wouldn't be delighted at the prospects of making Intel its right-hand, chip-vending man seems a bit naive.
Google will want every edge it can get in the smartphone space, and if Intel can deliver on its product road map over the next few years, its brand could be something immensely valuable to Google and the hordes of other handset vendors trying to make a buck in this cutthroat market.
Ashraf Eassa owns shares of Intel. The Motley Fool recommends Intel. The Motley Fool owns shares of 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.