So far the tablet market has been pretty much driven by the ARM processor camp, which power the vast majority of devices (including iPads, which have their own derivative). Intel is definitely coming from behind when it comes to mobile as it tries to muscle its way into the market. But it’s made some significant strides over the past year with some big wins including Dell Venue, Asus ZenPhones, rumors of Samsung devices, etc. Many have speculated that Intel doesn’t have a chance when it comes to mobility, but is this in fact the case?
The tablet market has been dominated by Apple’s iPad and Google’s Android powered devices, with the numbers of Android machines increasing, mostly at the lower end of the market. And despite the recent pull back in the market, especially noticeable by Apple’s shrinking sales of tablets, I expect the market for tablets to be healthy, albeit not for the lowest end players where making any money is difficult to impossible.
Intel has a two pronged strategy that gives it an advantage at the higher end of the mobility space. It has spent the last two years developing a close working relationship with Google to make sure that Android is optimized to run on Intel’s Atom chips. Intel has expended a great deal of time, effort and resources making this happen -- so much so that Google now provides a virtually simultaneous release of new versions of Android for both ARM and Intel chips. In the past there was a several quarter delay in releases the x86 version. This is no small win for Intel.
As Windows 10 comes to market in the next few months, Microsoft and its OEMs will be pushing it into many more mobility devices, particularly for enterprises that value the Windows ecosystem (and there are many of these).
I expect Windows 10 based tablets to grow significantly over the next 1-2 years, while still remaining a niche in the overall market except in enterprises where I expect a 10%-15% penetration. While some consumers will adopt Windows 10 tablets, we expect the majority of consumer sales to be price driven and likely go to the Android OS. This causes a dilemma for those OEMS, who have to create and sell two different devices for consumer and business markets. Intel has the singular advantage that it can help OEMs produce one SKU that can be loaded with either Android or Windows, at the customers discretion.
The advantage for OEMs should not be underestimated. Building one SKU and then loading the requested OS on-demand means not having to deal with excess inventory if the marketing department doesn’t get the manufacturing mix right. It also means, theoretically at least, that devices can be “re-flashed” with a new OS if the customer wants to move to either Windows or Android from the other OS, although I believe this will never be more than a very small number of users. Still, for enterprises, this potential safety net could be an advantage to vendors selling them devices.
Overall I still expect the vast majority of Android tablets to be powered by ARM, especially since the biggest numbers will be in the lower end of the market where the price-driven Far East suppliers will dominate. But for mid to higher end tablets, and particularly those deployed by the enterprise, I expect Intel to gain significant share of the market as their dual OS strategy resonates with OEMS, and the higher end features and functions available in the Intel platform are leveraged (e.g., Real Sense, Cognitive computing, manageability, etc.).
Further, I expect Intel to remain aggressive in pricing Atom to be competitive with ARM based chips, which will allow it to compete more fully with the lower cost chip producers. Finally, in the enterprise space where tablet deployment will grow, I expect the Intel brand to carry weight with purchasers who are less price sensitive and more focused on features/functions and perceived quality.
The major enterprise suppliers (e.g., Dell, HP, Lenovo) will all take advantage of the Intel strategy. It may ultimately extend to ChromeBooks as well which is a growing market, and ultimately may even help Intel in high end smartphones as vendors try to leverage designs that enable both phone and tablet platforms.
Intel’s CEO promised to sell chips into 40M tablets in 2014, and grow that significantly in 2015. I believe Intel has the strategy in place to do that and more by leveraging its hard fought advantage. So has Intel created an unfair advantage for itself in tablets? Perhaps not unfair, but certainly smart.
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