Nvidia Targets The Tablet Market; Qualcomm’s Reponse To Come Later This Year

The tablet market, owing to the nascent stage that it is in, is seeing high levels of interest not only from mobile vendors and OS developers but also the component suppliers. The mobile semiconductor market may be dominated by Qualcomm (NASDAQ:QCOM) currently but that is not stopping rivals such as Nvidia (NASDAQ:NVDA) and Intel (NASDAQ:INTC) from entering the market and eyeing tablets as a way of challenging Qualcomm’s growing smartphone dominance. Nvidia is  eyeing the low-cost tablet market with its Kai reference platform to counter Qualcomm’s growing dominance in the mobile market.

See our complete analysis for Qualcomm | Nvidia here

Low-cost tablets an untapped opportunity

For Qualcomm, Nvidia has been a major force to reckon with in the tablet market with significant design wins at Acer, Asus, Samsung, Sony, LG, Motorola, Toshiba and others. ^[1] Nvidia positioned its standalone dual-core app processors, the Tegra 2, well to capture significant non-iPad tablet market share in 2011. And now, it plans to make a deeper foray by targeting low-end tablets and cashing in on the huge untapped opportunity that the young tablet market presents.

The Tegra maker recently introduced a new reference platform for tablets, called Kai, that will make it possible for manufacturers to launch low-cost $199 Android tablets without impacting their margins while still being able to use the quad-core capabilities of the Tegra 3. (see Nvidia’s Kai Platform Makes Low-Cost Android Tablets A Reality) With rivals unable to catch up with the iPad in terms of design and feel, undercutting Apple seems to be the best near-term strategy to compete as the Kindle Fire has shown. Nvidia will be looking to use the greater capabilities of its quad-core Tegra solution (that we feel is best suited for tablets) as well as the low-cost Kai design to lure manufacturers that are looking to cash in on the growing demand for tablets.

Windows 8, LTE  and Quad-core – Three-pronged Qualcomm strategy

Meanwhile, Qualcomm is working closely with Microsoft and prepping its Snapdragon for Windows 8 tablets to be launched later this year. Windows 8 will see many PC as well as mobile manufacturers jump in on the offering to release both low-end and high-end tablets.

As for LTE, most of the popular tablets in their 4G-variant sport Qualcomm’s baseband currently. The most popular tablet, the iPad, along with a bunch of Android rivals such as LG Optimus, Pantech Element, Asus Transformer Pad Infinity, etc use Qualcomm’s LTE baseband chipsets. With LTE figuring in most tablet manufacturer’s plans in 2012 and beyond, Qualcomm will be looking to leverage its dominance in the LTE market to win deals for its integrated Snapdragon app processors. (see Qualcomm Leads the LTE Charge In 2012)

While Qualcomm does not yet have a quad-core solution to counter Nvidia’s growing presence in the tablet market, its recently launched dual-core Krait Snapdragon is very competitive. (see Qualcomm To Showcase Dual-Core Krait Processors At Mobile World Congress) Moreover, it plans to come out with a quad-core Krait processor later this year, so it may soon negate Nvidia’s competitive advantage.

However, unlike the smartphone market, Qualcomm will be coming from behind in the tablet market. But the fact that the tablet market is still in a nascent stage means the advantage Nvidia has over Qualcomm is not much. Qualcomm will therefore be relying on a combination of an increased adoption of LTE, successful launch of Windows 8 tablets as well as the launch of its high performance quad-core processors to make a bigger splash in the tablet market.

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1. CY 2011 Tablet Apps Processor Market: Intel and Qualcomm Miss the Boat, Strategy Analytics, May 7th, 2012 [↩]