At CES 2016, Intel (NASDAQ:INTC) revealed more details regarding its RealSense smartphone. The 6" device has three cameras -- an 8MP front camera, a 2MP rear camera, and a RealSense ZR300 camera for tracking movements and capturing 3D images at 10 million points per second.
The reference design is powered by an Atom x7 processor and sports 2GB of RAM, 64GB of internal storage, and a QHD display. It supports Google Project Tango and Intel RealSense SDKs (software development kits), which can both be used to create depth-sensing computer vision applications. Project Tango is mainly focused on augmented reality apps, while RealSense is designed for broader real-world uses.
Intel announced that it will start shipping the developer version of the phone in the first quarter of the year for $399. While this depth-sensing device might interest some software developers and enthusiasts, will mainstream interest in these phones grow?
What RealSense means to Intel
Intel's core business currently faces two main challenges. First, PC shipments are still falling year-over-year, which reduces demand for its PC chips. Second, Intel has failed to gain much ground against Qualcomm (NASDAQ:QCOM) and other leading mobile chipmakers in smartphones. Intel merged the two units into a single Client Computing division last year, but the business continues to post annual sales declines.
To stand out in the crowded mobile chip market, Intel integrated its Atom chips with RealSense cameras in single reference designs. In addition to laptops, tablets, and phones, Intel has also installed RealSense cameras in drones and connected cars to help them identify and avoid obstacles. The cameras can also be used for various surveillance, industrial, medical, and entertainment applications.
Thanks to that versatility, research firm Tractica estimates that the global market for computer vision technologies could grow from $5.7 billion in 2014 to $33.3 billion by 2019. As the computer vision opportunity grows into multiple markets, Intel can potentially sell more reference designs that bundle its Atom chips and RealSense cameras together. That flexible growth can help it diversify away from more rigid chip solutions for PCs and mobile devices.
But beware of Qualcomm
While that strategy sounds promising, Qualcomm, the biggest maker of mobile chips and wireless modems in the world, is pursuing a similar one. But instead of heavily promoting a single camera like Intel, Qualcomm created special chips optimized for connected cars, drones, and other devices.
Audi is already installing Qualcomm 820A chips in the infotainment and navigation systems of several 2017 vehicles. Snapdragon Flight, Qualcomm's new chipset for drones, is optimized for depth-sensing cameras and 3D mapping. Yuneec, a major Chinese drone maker, has tested drones using both Qualcomm and Intel's reference designs and collision avoidance modules.
Like Intel, Qualcomm is working with Google to create new Project Tango smartphones. Lenovo, one of the few major smartphone OEMs that use Intel chips, recently announced that its upcoming Project Tango smartphone will be powered by a Qualcomm chip instead. This means that even if depth-sensing phones gain mainstream popularity, Atom-powered RealSense smartphones probably won't help Intel gain significant ground against Qualcomm.
The future of RealSense phones
Intel has demonstrated some interesting virtual and augmented reality apps for RealSense smartphones in the past. RealSense cameras can also adjust focal points in photos to compensate for depth. However, there aren't any mainstream apps developed specifically for RealSense phones yet, so there's no reason for average consumers to buy them.
Most AR and VR apps today are designed to work with regular smartphones or tablets, so it's unclear when anyone will actually need one with depth-sensing and 3D mapping cameras. Moreover, the prototype RealSense phone is 8.9 mm thick, compared to the iPhone 6s at 7.1 mm. That slight bulkiness might turn off prospective customers when the consumer version hits the market.
Seeing the forest for the trees
Intel RealSense cameras probably won't provide a big boost for its smartphone efforts. But Intel investors should focus on how RealSense cameras might fare better in connected cameras, drones, cars, and other Internet of Things devices. Aggressively bundling RealSense cameras with Atom chips in these markets might help Intel eventually reduce its dependence on the weakening PC market.
Leo Sun owns shares of Qualcomm. The Motley Fool owns shares of and recommends Qualcomm. The Motley Fool recommends 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.