Smartphones are morphing into handheld computers in a shift that could force the mobile phone and PC markets to collide. As portable devices become more like personal computers, demand for cellphone microchips with the horsepower to give consumers the functionality they want appears primed to explode. Let's take a look at the two leading chip makers in these industries to uncover which company is better positioned to control the future of mobile devices.
While Qualcomm (NAS: QCOM) and Intel (NAS: INTC) are both chip makers, they currently supply different markets. Generally speaking, Qualcomm produces chips for phones, whereas Intel primarily focuses on chips for the PC space. However, the line between these separate sectors has started to blur, forcing the two companies into a sudden-death match for mobility market share.
The companies will face off next week at the Consumer Electronics Show in Vegas, where Qualcomm plans to showcase notebook computers running on its chips. To counter, Intel will take a page out of Qualcomm's book and introduce its new Medfield chip for cellular devices.
It isn't the first time Intel's tried to break into the mobile market. The company has lost countless deals to Qualcomm and other chip developers licensing technology from ARMHoldings (NAS: ARMH) .
At this point, Intel's chips consume significantly more battery power than ARM chips. However, Intel hopes to change that with its new Medfield processor. According to Intel, Medfield promises enhanced graphics and faster Web browsing. It also claims to use less battery than the top three smartphones currently on the market. However, we'll have to wait until CES next week to see if Medfield can live up to these impressive marks.
PC does it
Despite making ground on the mobile phone front, Microsoft's (NAS: MSFT) decision to run its newest operating system, Windows 8, on ARM technology could invite Qualcomm and other competitors into the Intel-dominated PC industry. This means Intel will need to work even harder to maintain its more than 80% hold on the computer and tablet market.
In 2010, PC sales accounted for 72% of Intel's net revenue. That's a large percentage of the chip maker's business that could be vulnerable to stronger competition in the sector.
Don't mess with the best
From where I'm sitting, it seems Qualcomm has a decent position in the mobile device market. And the company's push into Intel's turf is the right move if it wants its ARM-based processors to conquer the market for mobile computers. Intel, on the other hand, has the most to lose if its latest mobile plans fall flat.
For now, Qualcomm has a clear lead over Intel, but we'll have to wait until CES next week before crowning a winner in mobile computing. Until then, click here to track the latest developments on these stocks and more, with the Motley Fool's free Watchlist service.
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At the time thisarticle was published Fool contributorTamara Rutterdoes not own any stocks mentioned in this column. Follow Tamara onTwitterfor more Foolish news and wisdom, using the handle@TamaraRutter. The Motley Fool owns shares of Microsoft, Intel, and Qualcomm. The Fool owns shares of and has bought calls on Intel. Motley Fool newsletter services have recommended buying shares of Microsoft and Intel, creating a bull call spread position in Intel, and creating a bull call spread position in Microsoft. 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.
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