It seems that Samsung (OTC:SSNLF) has been focused on its high-end Galaxy Note and Galaxy Tab Pro. These devices have featured solid industrial designs and fast processors, all surrounded by an aggressive marketing campaign. While it's not clear how these designs have done in the market, it seems that Samsung isn't being anywhere nearly as aggressive on its mainstream Galaxy Tab lineup.
The Galaxy Tab 4 -- Samsung goes low end
The new Galaxy Tab 4 family (7, 8, and 10.1 inches) sports identical internals: a Qualcomm (NASDAQ:QCOM) Snapdragon 400 (1.2GHz quad core Cortex A7). This means that Marvell (NASDAQ: MRVL), Samsung's own semiconductor team, and Intel (NASDAQ:INTC) lose these sockets, respectively. What's interesting, though, is that while the 7- and the 8-inch models actually get a performance upgrade, the 10.1-inch, in moving from Intel's Z2560 to the Snapdragon 400, looks like more a side-grade.
What's interesting, though, is that for devices that Samsung sells at the $180, $250, and $320 price points, respectively, this is fairly low-end stuff. This is probably done to create a meaningful performance/user experience delta between the traditional Tab series and the Tab Pro and Note series. This is an interesting business move, but given the competitive environment (especially with Intel planning to arm its partners with cheap, high-performance Atom parts), this is a risky move.
Qualcomm has been gaining a lot of tablet momentum
In 2012, Qualcomm had a pretty tough time gaining share in tablets. However, in 2013, Qualcomm became the top silicon vendor in tablets. It seems that all major non-iPad brands currently in the market (Nexus 7; Galaxy Tab, Tab Pro, and Note; and Kindle Fire HDX) have gone to Qualcomm, although for Intel to hit its 40 million tablet goal it has probably won a couple of high-volume runners.
That said, it's interesting to see that Samsung would prefer to go with Qualcomm's chips rather than its own. But it's not too surprising when you consider:
- Qualcomm's chips are very highly integrated with communications/connectivity, which allows for a very cheap bill of materials (essential for Samsung's margins).
- Qualcomm is a foundry customer to Samsung's semiconductor division, and likely to become a closer customer.
It will be interesting to see what Samsung's component choices look like once it launches a system-on-a-chip with its own custom core. Indeed, while Samsung's Austin Research and Development Center has hired fairly aggressively, Qualcomm and Intel invest substantially more in chip development, so it's unclear as to whether Samsung will more aggressively pursue in-house chip development or simply defer to merchant suppliers.
Foolish bottom line
Ultimately, Samsung's choice of Qualcomm nearly across the board for its smartphone and tablet products is a testament to the quality of the engineering and product definition teams over at Qualcomm. No doubt the specifications of these chips are influenced by Samsung's (and other tier-1 phone vendors') requirements, but Qualcomm's execution has been second to none in the mobile-chip space. It'll be interesting to see what the mobile-chip landscape looks like within the next three years and whether Qualcomm will have the commanding lead that it does today.