Qualcomm Has a Lock on Microsoft's Windows Phone

As somebody who covers chip stocks extensively, it's quite interesting that many investors believe that Intel's future in smartphones hinges on the success or failure of Microsoft's Windows Phone. This couldn't be further from the truth, particularly as rival chipmaker and smartphone chip behemoth Qualcomm has a literal monopoly on processors for Windows Phone.

That's right -- it's all Qualcomm, baby
If you look at the Windows Phone models available today, you'll see that every one of them is powered by a Qualcomm Snapdragon processor. This makes sense, particularly as there are no other mobile chip vendors today that offer the performance, integration, and product breadth and depth that Qualcomm does in smartphone chips. From the lowest Snapdragon 200 to the highest-end Snapdragon 800 series, Qualcomm has a chip for just about every phone.

Further, while the other merchant mobile chip vendors such as MediaTek have good hardware solutions, it seems as though Qualcomm went the extra mile to make sure that both the hardware and software was there. Furthermore, Qualcomm and Microsoft recently jointly announced a reference design program based on Windows Phone and Qualcomm silicon that makes it easy for OEMs and ODMs to bring to market Windows Phone-based designs.

Yes, folks, Qualcomm has done the work to get a "lock" on Windows Phone.

Where's Intel?
While the majority of Intel's profits comes from its PC Client Group (which depends on the sales of Windows-based devices), the company has shown very little interest in pursuing Microsoft's Windows Phone platform. From a near-term financial perspective this makes sense -- Windows Phone is a pretty negligible part of the overall smartphone market, so doing all of the legwork to develop drivers, reference designs, and so on when the company needs to pull its Android story together seems like a poor use of resources.

That said, long-term, Microsoft may actually gain some pretty significant share with Windows Phone, particularly now that Nokia's devices division is now under its roof. It is important for Intel to not let this ecosystem work exclusively on ARM Holdings architecture processors, particularly as these types of software hurdles have proved to be a veritable headache for Intel on the Android side of things. Intel can't keep forking over bags of cash to developers every time it misses a mobile device platform.

Foolish bottom line
For now, it seems that Qualcomm has a virtual lock on the Windows Phone applications processor market. While this isn't a huge part of the mobile market today, it could be in the future, which makes Qualcomm's positioning and partnership with Microsoft look smart. It is interesting (but understandable) that Intel isn't devoting the resources to play here, but if Windows Phone ever gains meaningful inroads, this early partnership on Qualcomm's part will only make Intel's smartphone endeavors that much more difficult. 

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The article Qualcomm Has a Lock on Microsoft's Windows Phone originally appeared on Fool.com.

Ashraf Eassa owns shares of ARM Holdings and Intel. The Motley Fool recommends Intel and owns shares of Intel, Microsoft, and Qualcomm. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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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