Intel Introduces A New Platform To Accelerate Innovation In The IoT Space

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Earlier this week, Intel (NASDAQ:INTC) launched a new platform and related software and services to help developers accelerate innovation in the Internet-of-Things (IoT) space. The Intel IoT Platform includes an updated version of the Intel IoT gateway, edge management middleware from Wind River, enhanced McAfee security, and API and traffic management tools. It aims to address IoT devices from industrial machinery to smart headphones to medical equipment, including wearables. The new platform provides a reference model, making it easier for customers to implement their own solutions and deliver innovations to market faster. Accenture, Booz Allen Hamilton, Capgemini, Dell, HCL, NTT DATA, SAP, Tata Consultancy Services Ltd., Wipro and others are joining together with Intel to develop and deploy solutions using their building blocks on the Intel IoT Platform. (Read Press Release)

IoT is still at a nascent stage and is a rapidly growing market, but faces scalability hurdles. By simplifying the development process and making it easier to deploy new solutions that address market needs, the company believes it can help accelerate innovation in the space. Intel offers Atom CPUs for more powerful embedded devices and Quark CPUs for smaller, low-power products.

Having missed out on the mobile revolution, Intel seems determined to be an early entrant in the IoT space, which is considered to be the next big wave in computing. IoT includes all the other computing devices apart from PCs, tablets and smartphones. Gartner estimates the market will grow almost 30 times, from an installed base of 0.9 billion in 2009 to 26 billion by 2020. It will result in $1.9 trillion in global economic value-add through sales into diverse end markets. [1]

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In August 2014, Intel signed a definite agreement to acquire LSI’s Axxia networking business and related assets from Singapore-based Avago, a vendor of analog semiconductor devices, for $650 million in an all-cash deal. The deal was expected to aid Intel’s foray into the IoT market and other emerging technologies. Additionally, Intel has been investing in a wide range of start-ups in the wearables space.

With the new IoT platform Intel aims to tie a broader range of device makers to its technology, competing directly with ARM Technology. ARM’s low-cost processors are present in majority of the smartphones and tablets selling today, whereas Intel has failed to make a significant mark in that segment until now.

With the expanding growth opportunities in the IoT segment and Intel’s focus on rapidly expanding its footprint in the market, we believe IoT’s contribution to the company’s total revenue can more than double over our review period. Intel believes that its IoT revenue will grow 18%, crossing $2 billion, in 2014.

See our complete analysis for Intel

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

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Notes:
  1. Gartner Says the Internet of Things Installed Base Will Grow to 26 Billion Units By 2020, Gartner Newsroom, December 12, 2013 []