Intel Just Made a Critical Move

Intel Just Made a Critical Move

After years of letting its mobile competition take the lead, Intel seems poised to make mobile a major priority. The company just introduced new plans to speed up its mobile chip offerings, but Intel is still closely tied to the PC industry and its competitors are already years ahead of Intel -- leaving investors wondering if the company can ever catch up.

Planning ahead, falling behind
Part of Intel's new strategy is to ramp up mobile chip designs, including having two new chips inside tablets and smartphones by 2015. The chips will be the first Intel Atom processors with an integrated modem, which has become an important feature because it prolongs mobile device battery life. But Intel's chips fall far behind competitors like Qualcomm , which is already on its third generation of integrated mobile processors.

Qualcomm is the dominant force in smartphone processors, and the company is looking to hold onto its lead with its recent announcement of its new Snapdragon 805 processor. Qualcomm's new chip is designed for the high-end market, and will have the capacity to record and play back ultra HD 4K video and will achieve 40% faster graphics processing than the previous Snapdragon.

But Intel isn't looking to build a vast mobile processing kingdom like Qualcomm's just yet. The company wants to grab a small amount of large mobile contracts first. To do this, Intel is trying to accelerate its mobile position by taking an ARM-based smartphone chip and replacing it with Intel technology, called SoFIA. Intel then wants to sell the chips in tablets priced around $100. This decision speeds up Intel's time frame for bringing cheaper processors into tablets, but it doesn't necessarily mean the company will enjoy mobile revenue that much faster.

Easier said than done
Despite Intel's plans to move further into mobile, the company is still massively tied to the PC market. A recent Financial Timesarticle said that even if Intel's tablet ambitions paid off next year, the new tablet chip sales would only add about $600 million in revenue -- not much considering Intel's total annual revenue was $54 billion in 2012.

Although Intel is speeding up its mobile offerings timeframe, it's not likely the transition will pay off anytime soon. This past quarter, Intel's PC division brought in $8.4 billion in revenue and its data center division brought in revenues of $2.9 billion, while its other divisions lost money. Intel investors should be cautiously optimistic about the company's mobile ambitions, keeping in mind that Intel still has a long road ahead before it can make any significant gains against its mobile competitors.

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Fool contributor Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Intel. It also owns shares of Qualcomm. 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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Originally published