1 Important Way Intel Still Tops Qualcomm
No two companies embody the shift of traditional computing to mobile form factors like Intel and Qualcomm . The two chip makers are two sides of a silicon coin, where one dominates the market for PC processors while the other is the go-to vendor for mobile chips.
Late last year, there was a symbolic changing of the guard when Qualcomm's market cap overtook Intel's for the first time ever. In the months since, Qualcomm has slightly widened its lead, but both companies are worth right around $110 billion.
Intel continues to face headwinds, as the PC market that it relies on remains weak, while Qualcomm's licensing and chip businesses are both sitting pretty amid global consumer adoption of mobile devices.
However, there's still one important way in which Intel still tops Qualcomm.
When the average consumer thinks PC processor, they immediately think Intel. Intel has dominated the market for PC chips for decades, with smaller rival Advanced Micro Devices always playing second fiddle. With such long-standing hegemony comes strong brand recognition.
In Interbrand's 2012 ranking of the best global brands, Intel ranked No. 8. Qualcomm didn't even crack the top 100. The consultancy valued Intel's brand at nearly $40 billion.
While Qualcomm's technology is found inside nearly every single mobile phone in the world in some form or fashion -- either through licensing its intellectual property portfolio or one of its mobile chips (applications processors and baseband modems) -- most consumers may not even realize it. Even fewer care.
The market for mobile chips is more competitive than PCs, and there is also a higher level of integration among device OEMs where chips are designed in-house. Qualcomm enjoys a revenue share of over 40% in the applications processor market, but that's only part of the bigger picture, as companies like Apple and Samsung, the two largest smartphone vendors, are increasingly moving toward in-house chips.
That's one reason why Qualcomm can't command the same level of brand recognition as Intel. It's not as if Hewlett-Packard or Dell ever made their own PC processors.
In a recent interview with MIT Technology Review, Qualcomm chief marketing officer Anand Chandrasekher addressed how he hopes to change that. The exec spent 18 years at Intel and only joined Chipzilla's rival last year.
Part of the problem is that Qualcomm has historically not marketed directly to consumers, something that Intel did from the get-go with its iconic "Intel Inside" campaign that put its name directly on the outside of every PC sporting one of its processors. Smartphones with Qualcomm's logo directly on them are few and far between, in part because there's physically less space to put a sticker on, according to Chandrasekher.
Qualcomm now wants to push its Snapdragon brand more aggressively, which is one of its more recognizable products. You may have started to see Snapdragon commercials touting battery life mixed in with your regularly scheduled programming, but probably only relatively recently.
Chandrasekher considers his company a "$100-billion-plus company, in terms of market cap, that nobody knows." Appealing directly to consumers is a tough proposition, though, because many may not be familiar with the technical details of why Snapdragons are superior to the competition -- that pitch is for the OEMs building devices.
Onward and upward
Qualcomm CEO Paul Jacobs also hosted the opening keynote at this year's Consumer Electronics Show, hoping that would gain it some mindshare with consumers. Too bad the presentation was so weird that most people were left confused and wondering what Big Bird, Desmond Tutu, vampire attacks, and Star Trek have to do with Qualcomm.
The marketing exec acknowledged that the CES event didn't go so well, but that the company continues to learn how to better market itself to convey its value proposition directly to consumers. It might take a long time and a ton of marketing money, but can Qualcomm ever match Intel's brand?
When it comes to dominating markets, it doesn't get much better than Intel's position in the PC microprocessor arena. However, that market is maturing, and Intel finds itself in a precarious situation longer term if it doesn't find new avenues for growth. In this premium research report on Intel, our analyst runs through all of the key topics investors should understand about the chip giant. Click here now to learn more.
The article 1 Important Way Intel Still Tops Qualcomm originally appeared on Fool.com.Fool contributor Evan Niu, CFA, owns shares of Apple and Qualcomm. The Motley Fool recommends Apple and Intel. The Motley Fool owns shares of Apple, Intel, and 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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