Intel (NASDAQ:INTC) recently announced that it would be bringing to market what it calls "Mobile Xeon" processors. As you might be aware, the "Xeon" branding is typically reserved for Intel's higher-end workstation and server processors. However, with the imminent availability of the "mobile" Xeon E3 1500 v5 family of processors, Intel is bringing the Xeon brand to high-performance notebooks.

Although it might seem as though Intel is stuffing more higher-performance processors into notebook computers than it has before, the reality is that it's not. Allow me to explain.

"Mobile Xeon" is just Skylake-H with some features enabled
Intel typically releases high-performance quad-core CPUs for larger, more powerful notebooks. There are generally two major variants of these mobile-oriented quad core parts: ones with the lower-end GT2 integrated graphics and ones with the higher-end GT3 and fast on-package memory.

According to a slide that leaked a while back, the mobile Xeon processor will be based on the Skylake-H chip design. This means that, from a silicon perspective, this mobile Xeon is a quad-core Skylake processor with integrated GT4e graphics.

In other words, Intel hasn't designed a fundamentally new mobile Xeon chip, nor is it taking one of its heavyweight desktop workstation/server chips and trying to shoehorn it into a mobile power envelope. It's just a high-end mobile chip without certain features (such as ECC memory) disabled.

Intel does the same thing with its Xeon E3 line of processors for desktops. Those, too, aren't fundamentally different pieces of silicon relative to the consumer Core i5/i7 chips; they simply ship with functionality intact that is there in the consumer silicon, but disabled by Intel.

What does this mean for Intel, then?
In Intel's initial blog post announcing the upcoming mobile Xeon parts, the company cited an interesting fact from market research firm, IDC: mobile workstation year-over-year unit growth has been positive over the last six quarters.

Intel likely sees an opportunity to increase its average selling prices in this market by enabling "workstation-specific" features such as ECC memory support. Although Intel will likely charge more for a Mobile Xeon than a Core i7, potential customers might be willing to pay more for those additional features and for the positive association with respect to workstation features and performance that comes with the Xeon branding.

This likely isn't going to be a material driver of Intel's financial performance nor its share price. However, I do think that Intel has a relatively easy opportunity to create some, albeit relatively small, incremental value for its shareholders by upselling mobile workstation customers to mobile Xeon processors.

One more interesting implication
Intel has indicated that the first mobile Xeon-based systems should hit the market in the fall. Indeed, major PC player Lenovo has even announced its first products based on the new chips.

This seems to further reinforce my suspicion that Intel might make its higher-performance Core i-series processors with GT4e graphics available to system vendors later this year. Indeed, said vendors should be able to deliver substantial upgrades to their lineups by moving from the older quad-core Haswell chips with GT3e graphics to quad-core Skylake processors with GT4e graphics.

The big concern that I have, though, is that Intel seems to be having trouble keeping up with demand for its desktop-oriented quad-core Skylake processors with the much less powerful GT2 graphics.

If manufacturing these smaller (and thus easier-to-build) Skylake chips is tough, then manufacturing the significantly larger quad-core Skylake processors with GT4e graphics may prove significantly more difficult. This might impact the initial availability of the processors, meaning that system vendors might wind up waiting for Intel to improve chip supply before releasing upgraded systems.


 

Ashraf Eassa owns shares of Intel. The Motley Fool recommends Intel. The Motley Fool owns shares of Intel. 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.