Intel To Replace TI In The New Version Of Google Glass

Intel (NASDAQ:INTC) will replace Texas Instruments (NASDAQ:TXN) in the new version of Google Glass, according to a Wall Street Journal source. ^[1] Google Glass is a head-mounted device resembling a pair of spectacles that allows people to view the Internet and take pictures. The first version of the device used a TI processor, but did not gain much popularity due to its high price and privacy concerns.

Google Glass was initially promoted as a consumer gadget but Intel plans to promote the next version as a workplace-computing device, to hospitals and manufacturers. Earlier this year, Google announced that it was pushing the Glass for business uses with a program called “Glass at Work”, and said employees of oilfield services company Schlumberger are using Glass to improve safety and efficiency. While Google partners are promoting workplace uses of Glass, the Internet giant still views it primarily as a consumer device. More than 300 Google employees work on Glass, and fewer than 5% focus on Glass at Work, according to a person familiar with the business. ((Google-Glass Deal Thrusts Intel Deeper Into Wearable Technology, The Wall Street Journal, November 30, 2014))

See our complete analysis for Intel

Intel, which is a leader in PC and server microprocessors, was a late entrant in the mobile computing space and for this reason does not (yet) have a very large presence in the market. The company reported operating loss in excess of $3 billion from its mobile and communication division in the first three quarters of 2014. However, the computing giant is keen to become an early entrant in what is touted to the be next big wave in computing – wearable technology.

Juniper Research estimates the wearable computing device shipments will increase from 15 million units in 2013 to 150 million units by 2018. ABI Research forecast the figure to cross 450 million units during the same period. ^[2] The wearable device market is still at a nascent stage and is quite competitive with everyone from Qualcomm (NASDAQ:QCOM), Texas Instruments (NASDAQ:TXN), Broadcom (NASDAQ:BRCM) to startups vying to grab a share of this fast growing market.

Earlier this year, Intel acquired Basis Science, which specializes in wearable device technologies for health and wellness applications. Basis Science is one of the leaders in health tracking for wearable devices and accounts for around 7% of the market. ^[3] In August, Intel partnered with the The Michael J. Fox Foundation for Parkinson’s Research to create the technology and software to better monitor and treat Parkinson’s disease using wearable devices. The company has also partnered with renowned rapper 50 Cent to create fitness-tracking headphones. ^[4] Last month, Intel officially launched its MICA (My Intelligent Communication Accessory) smart bracelet, a feminine fashion accessory designed by Opening Ceremony and engineered by Intel, with communications capabilities.

Intel chips currently power Google servers, and the two companies are working to advance Google’s Android and Chrome operating systems. Intel’s Xeon chips have been used in Google’s self-driving cars, and its Atom chips are used in the Nexus Player, a new Google streaming-media device.

Intel currently derive less than 10% of its valuation and approximately 5% of its revenue from the Internet-of-Things segment. We believe that accelerating its entry in wearables augurs well for Intel’s long term growth potential. (Read: Intel’s Expanding Presence In Mobile & IoT To Help Drive Future Growth)

Our price estimate of $34 for Intel is at an approximate 10% discount to the current market price.

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1. Google-Glass Deal Thrusts Intel Deeper Into Wearable Technology, The Wall Street Journal, November 30, 2014 [↩]
2. Broadcom Targets Wearable Tech Role, TechWeek Europe, August 30, 2013 [↩]
3. Basis Goes To Intel For Around $100M, TechCrunch, March 3, 2014 [↩]
4. Intel Is Covering Its Bases In The Wearables Market With A New Wearable For The Fashion Conscious, Forbes, September 3, 2014 [↩]