At its recently concluded Development Forum, Intel (NASDAQ:INTC) unveiled new products and announced its plan to bring new mobile hardware and software technologies to market in the near future. The company believes that the ongoing shift towards mobility and personalization of technology and consumers are the key trends dominating the semiconductor industry at present.
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Intel’s growth has slowed recently primarily on account of its late entry and consequently limited footprint in the mobile computing space. However, the company has made several strategy and priority changes to stay in line with the changing technology landscape. It firmly believes that with its process technology, it can have performance, power and cost leadership in various sub-segments of the market.
Our price estimate of $29.21 for Intel is at a premium of around 30% to the current market price. With the ongoing shift away from traditional PCs and towards smartphones and tablets, we think Intel’s increasing focus on ultra-mobile products is a good long term move. Additionally, as the industry accepts innovative form factors in touch-screen notebooks, convertibles and detachables, we anticipate the demand for Intel processors to improve.
In this article we highlight new platforms introduced by Intel that can help re-accelerate its growth trajectory in the future.
The Bay Trail Platform Can Help Gain Share In Tablets & Low-Cost PCs
Based on one of the biggest chip architecture advances in Intel’s history (Silvermont), Bay Trail is the company’s first quad-core Atom SoC. With Bay Trail, Intel intends to extend its product line across screen sizes and price points in tablets as well as low-cost PCs. Intel claims that for a specific product one has the option to optimize two out of three parameters from power, performance and cost. For Bay Trail, the company has chosen to optimize power efficiency and cost. Bay Tail runs on both the Windows as well as the Android platform.
Intel’s earlier Atom SoC based on Clover Trail and Clover Trail+ platforms were present in a relatively small number of tablets. Backed by some recent high profile design wins such as the Samsung Galaxy Tab, the company now accounts for 4% – 5% of the global tablet market.  With the official launch of new versions of its Atom processors (Z3000 series-Bay Trail), Intel feels confident of grabbing a larger share of the market in the future.
Intel powered tablets could be available for as low as $199 and below in the future. In its Q2 2013 earnings call transcript Intel stated that it is gaining market share in tablets and aims to quadruple it tablet volumes this quarter, compared to Q1 2013. 
Bay Trail can also help Intel increase its presence in the low-cost PC segment, an area historically dominated by AMD. Going forward, we expect to see ultrabook prices reduced to $599 with some models available for even $499 by this year end. On the other hand, touch-enabled Intel-based thin notebooks might be available for as low as $300 and below in the future. 
Merrifield Platform For Smartphone & Quark Processors For Internet Of Things
At present, Intel has a near zero share in the smartphone market. Its upcoming Merrifield platform is also based on the Silvermont platform and is specifically designed to increase the company’s competitiveness in the smartphone market. Additionally, Intel currently ships the single-mode 4G LTE data solution but will start shipping multimode voice and data LTE baseband solutions by the end of this year. Despite intense competition in the market, we think an expanding mobile portfolio can help Intel increase its penetration in the smartphone market.
Intel also introduced Quark, a new processor family with really low power requirements designed for the things that connect to “The Internet of things” – and wearable computing devices. This is an area that is slated to expand at a rapid pace in the next decade. The company intends to make its entry into the the wearable and low-end processor market as quickly as it can.
Haswell To Spur Demand For Higher End PCs
Intel recently launched its fourth generation core processor family, code-named Haswell. The processor promises to offer improved performance, strong graphics and up to 13 hours of battery life (the biggest improvement in battery life in Intel’s history), in turn enabling a broad new range of ultra-sleek designs across multiple form factors like the 2-in-1 convertibles and other touch-enabled devices.
Intel claims that around 70% of today’s Ultrabooks are touch enabled and anticipates the number to reach 100% by this year end. ((Intel announces Bay Trail tablet CPU, part two, TechEYE.net, September 13, 2013)) The 2-in-1 devices can help spur demand for Intel processors as they offer customers the benefits of a PC and convenience of a tablet. Around 60 designs ranging between $349 and $999 are expected to hit the market in the near future. Sony Duo 13-inch slider, the Dell XP 11, the Sony detachable and Dell XP 12 are some recently announced design wins by Intel.
Though we maintain a conservative estimate for PC shipments in the future, we think that with improving macro conditions, increasing demand from emerging economies and introduction of new ultrabooks, convertibles and touch-enabled designs, the rate of decline in global PC demand will drop in the future.Notes:
- Intel’s Management Presents at Citi 2013 Global Technology Conference (Transcript), Seeking Alpha, September 4, 2013 [↩]
- Intel’s Krzanich pledges stronger mobile push in his first speech as CEO, Computer World, May 16, 2013 [↩]
- Intel’s CEO Discusses Q1 2013 Results – Earnings Call Transcript, Seeking Alpha, April 16, 2013 [↩]