In a blog post penned by Intel's (NASDAQ:INTC) Dr. Venkata "Murthy" Renduchintala, the executive made the following statement:
We are not exiting mobile, but we are broadening its definition to make it synonymous with the interconnectedness of the more than 50 billion "things."
This statement is actually a little bit strange considering that the company recently announced a significant restructuring that led to the cancellation of the company's SoFIA and Broxton families of smartphone/tablet system-on-a-chip products.
Renduchintala goes on to state later in the post that Intel will "develop competitive solutions that combine the optimal architecture, modem capability, and other IP assets that best deliver value to the target [Internet of Things] devices and their ecosystems, whether they are drones, robots, PCs, cards, retail systems or smartphones."
Frankly, it's hard to really have a lot of faith in this claim. Here's why.
Scaling back so far it can't compete
Intel has made it clear that it is significantly reducing its investments in developing products for the mobile/smartphone market. According to a research note from analyst David Wong, Intel CFO Stacy Smith told a small group of analysts that the company "plans on scaling back in tablet and smartphone SoCs ."
So, on one hand, we have the CFO of the company telling analysts that smartphone chip development will be cut back (and, almost certainly, all of the software and platform development work required to enable smartphone designs around those chips). On the other hand, we have an executive putting out a blog post claiming that Intel isn't actually exiting mobile and that it will develop "competitive solutions" for many devices, including smartphones.
If Intel couldn't compete in the smartphone market when it was throwing tons of financial resources and manpower at the job, how can it expect to do well if it has scaled back those investments significantly and now treats smartphones as just one of many types of devices that the company will be focusing on?
Not likely to be a major player in smartphone SOCs
Intel has made it clear that it intends to continue to compete for whatever stand-alone modem business there is to be had, so in that sense the company is not "exiting mobile." However, I would urge those who interpret Renduchintala's post as a declaration that Intel will be a major player in smartphone processors going forward to temper their expectations.
Intel spent many years and billions of dollars on research and development, "contra-revenue" efforts to establish a footprint in mobile, and all of it has been for naught. For whatever reason, the company just couldn't deliver the goods.
At this point, Intel is probably best off leaving this market alone and focusing on other business segments in which it has been successful.
That being said, if Intel were to decide to acquire its way into the mobile chip business (perhaps with the purchase of a major player, such as MediaTek), then that would be something different entirely. But, at this point, I have zero faith in Intel's ability to compete effectively in phones with an organic effort.
Ashraf Eassa owns shares of Intel. 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.