Ahead of its analyst meeting, Qualcomm (NASDAQ:QCOM) announced that it is currently sampling its next generation LTE-Advanced modem to customers for commercial launch in 2015. The modem supports LTE-Advanced category 10, which means speeds of up to 450 megabits per second downloads and 100 megabits per second uploads. This is the most advanced cellular modem currently announced, as generally expected from Qualcomm.
For Intel (NASDAQ:INTC), which has been investing heavily in trying to become a credible player in the high-end of the cellular base-band market, this likely puts a damper on its ambitions at the high end of the stand-alone cellular modem market.
What does Intel have planned for 2015?
At the Intel Developer Forum hosted in China earlier this year, Intel presented the following road map for its stand-alone cellular modem solutions:
The “next generation” modem that Intel lists in the slide is likely to be called the XMM 7360, although the feature-set seems to correspond more with what is referred to as the XMM 7460 in leaked documents.. While it does appear to be a robust feature set, it still looks to be behind what Qualcomm is claiming for its MDM9x45 product in that it only supports category 7 speeds. Further, it's not clear when during 2015 Intel plans to have this "next generation" modem ready.
What does this mean for Intel's smartphone efforts?
In order for Intel to succeed at the high-end of the smartphone market, it needs to have leadership not just in application processors (and in phones Intel doesn't even have that today), but it also needs leadership in cellular baseband.
I'm pretty confident that Intel has the expertise within its walls to put together a best-in-class applications processor, although I'm not certain as to when this will actually occur. Intel claimed at its last investor meeting that its Broxton chip coming in "mid-2015" would be that part, but as I have written previously, there's reason to doubt that Intel will hit this schedule.
The real question, then, is whether Intel will achieve parity in cellular basebands. The good news is that I do think Intel will be able to leverage its manufacturing leadership in its cellular basebands to try to gain a density/cost edge on Qualcomm over time. The bad news for Intel, though, is that Qualcomm's feature set is quite a bit ahead and it's not at all a foregone conclusion that Intel can "catch up."
Intel's best bet may be to compete on price. A good way to do this profitably would be to bring its modems, applications processors, and integrated solutions onto its own manufacturing technologies as soon as possible. Even if Intel is a generation behind on features for the modem, it could still leverage its manufacturing lead to bring to market very power-efficient and cost-effective solutions for the low-end and the mid-range, which is where the majority of smartphone growth is expected to be, anyway.
Time for a strategy update?
I still think Intel can succeed in mobile, although I do think that the company needs to adjust its strategy in order to play to its strengths. At this time, I'm no longer optimistic that Intel has a near-term shot at doing well at the high-end of the smartphone market (tablets, which are generally Wi-Fi-only devices, are a different story).
However, if it can leverage its manufacturing technology and scale to build a large, powerful, and profitable presence in the low-end and mid-range of the smartphone market, then that'd be very welcome news to Intel stockholders. I just hope that Intel gives its mobile strategy the time it deserves at tomorrow's investor meeting.