The past week saw quite a few developments in the mobile sector. Research in Motion (NASDAQ:RIMM) gave a grim business update about the current quarter after the markets closed Tuesday sending its already distressed shares into a tailspin. Nvidia (NASDAQ:NVDA) announced that its Icera LTE chipsets have been validated by AT&T (NYSE:T), thus paving the way for the company’s first Tegra-powered LTE device and increasing competition in an area where Qualcomm (NASDAQ:QCOM) has had a clear upper hand until now. It also introduced a new reference design for tablets called Kai that it hopes will make it possible for manufacturers to launch low-cost Android tablets without impacting their margins.
Research In Distress
RIM delivered some shocking news after the markets closed Tuesday sending its already distressed shares into a tailspin. Giving a business update about the current quarter, RIM CEO Thorstein Heins warned that the company may slip to an operating loss this quarter as its BlackBerry phones continue to struggle against Apple’s (NASDAQ:AAPL) iPhone and the horde of smartphones running Google’s (NASDAQ:GOOG) Android.
As part of its CORE program intended to drive operational efficiency in the organization, the company will be aggressively cutting jobs all the year round while continuing to hire for positions that are more suited to its BB10 development. Further, the company has hired advisers to help the board evaluate strategic options in order to salvage or possible sell off parts of its business. (see RIM Shocks Markets With Weak Sales Guidance, Outlook Uncertain)
Nvidia Meets 4G Challenge
Qualcomm has done very well so far to ride the LTE revolution by coming to market with the first LTE radio integrated with its Snapdragon app processors. (see Qualcomm Gives The Wireless Industry A Reason To Celebrate) Nvidia, on the other hand, had LTE compatibility issues with its Tegra processors. This forced HTC to go with Qualcomm for the LTE version of their flagship One X smartphone launched in the U.S. while using Nvidia’s quad-core Tegra 3 for the outside markets. HTC is now going global with the LTE-capable HTC one X and using Qualcomm’s parts for these launches as well. Even the latest Samsung Galaxy S III will in all likelihood be launched in the same way in the U.S. while globally being launched in a Samsung Exynos quad-core variant. Clearly therefore, when it comes to LTE compatibility, Qualcomm’s Snapdragons have been the obvious choice.
Nvidia’s announcement of a LTE radio therefore comes at an important time and answers some of its 4G woes. It not only allows Nvidia to challenge Qualcomm’s dominance in the LTE baseband market but also paves the way for its first LTE-capable Tegra smartphone or tablet. However, Nvidia doesn’t have the LTE radio integrated with its Tegra 3 on a single silicon chip as Qualcomm’s does. This is a major shortcoming for mobile devices, and even more so for LTE devices that are notorious for their battery life issues, as an integrated solution allows for sleeker designs and reduces power consumption. However, Nvidia doesn’t plan to have an integrated solution ready until next year.
Still, Nvidia will be able to use its newly acquired LTE capabilities as well as partner with third-party chip providers (GCT and Renesas) to win deals for its Tegra 3 app processors using the quad-core capabilities of the latter as bait. But Qualcomm’s new dual-core Krait processors are not that far behind in terms of performance. (see Qualcomm To Showcase Dual-Core Krait Processors At Mobile World Congress) Moreover, Qualcomm plans to bring out a quad-core Krait in the later half of this year; so it will soon negate Nvidia’s competitive advantage. (see Qualcomm’s Slow And Steady Quad-Core Strategy)
Kai Targets The Emerging Tablet Market
For Qualcomm, Nvidia has been a major force to reckon with in the tablet market with significant design wins at Acer, Asus, Samsung, Sony, LG, Motorola, Toshiba and others.  Nvidia positioned its standalone dual-core app processors, the Tegra 2, well to capture significant non-iPad tablet market share in 2011. And now, it plans to make a deeper foray by targeting low-end tablets and cashing in on the huge untapped opportunity that the young tablet market presents.
The Tegra maker recently introduced a new reference platform for tablets, called Kai, that will make it possible for manufacturers to launch low-cost $199 Android tablets without impacting their margins while still being able to use the quad-core capabilities of the Tegra 3. (see Nvidia’s Kai Platform Makes Low-Cost Android Tablets A Reality) With rivals unable to catch up with the iPad in terms of design and feel, undercutting Apple seems to be the best near-term strategy to compete as the Kindle Fire has shown. Nvidia will be looking to use the greater capabilities of its quad-core Tegra solution (that we feel is best suited for tablets) as well as the low-cost Kai design to lure manufacturers that are looking to cash in on the growing demand for tablets.
- CY 2011 Tablet Apps Processor Market: Intel and Qualcomm Miss the Boat, Strategy Analytics, May 7th, 2012 [↩]