Intel (NASDAQ:INTC), the PC microprocessor heavyweight, has dominated the PC market for the past two decades. With the upcoming Windows8 operating system supporting the ARM architecture, ARM Holdings (LSE:ARM.L) which focuses more on the tablet and smartphone market, might threaten Intel on its own turf. Additionally, the launch of AMD’s (NYSE:AMD) 2nd generation APUs – codenamed “Trinity” – could challenge Intel-powered Ultrabooks that comparatively have a higher price point. (See Our Article: AMD’s Trinity Chips to Challenge Intel-Powered Ultrabooks)

We see Intel’s market share in PC microprocessors declining over the years, but are of the view that it will continue to be a dominant player in the industry with the majority market share. The “Intel inside” brand provides Intel the added price premium in the marketplace and, the recent launch of its vPro Ivy Bridge processors embedded with security features is just a case in point of why Intel command that premium in the market.

See our complete analysis for Intel

New Generation of Secure Processors

Intel recently launched its third generation Intel Core vPro processors, code named Ivy Bridge, designed for use in business laptops, desktops and intelligent systems. Like the Ivy Bridge core i-series processors launched last month, the Core vPro processors are based on Intel’s 22nm micro-architecture but comes with an improvement in performance and feature better graphics with a faster response time.

Leveraging the security technologies from the acquisition of McAfee in 2010, Intel is continuing to make security policy integration deeper into its technologies. The new processors boast tighter integration with Intel’s McAfee security technology and include security enhancements to help businesses protect against risks  such as identity thefts. It provides hardware level protection for e-banking, e-commerce, virtual private networks and other secure transactions.

Security seems to be Intel’s major focal point for this release, with the inclusion of the Identity Protection Technology and a series of other capabilities, optimized for the secure transmission of both personal and business data.

Targeting a Lower Price Point Could Counter Declining Share in PC Market

The new chips are intended for use in ultrabooks, laptops, desktops, workstations as well as “intelligent systems” in retail, healthcare and manufacturing. Though the processors are still growing aggressively in its current segment of systems that cost $850 and above , Intel claims to be working with OEMs to make vPro available at mainstream price points for desktop systems. ^[1] Lenovo and HP have both unveiled enterprise-class ultrabooks running third-generation Intel Core vPro processors.

The initial launch of Ivy Bridge chips failed to garner the expected response, as the steep price was a cause for concern for many. However, Intel has been trying to bring down the prices of ultrabooks which is expected to materialize this year.

Currently, we estimate Intel’s market share in notebooks to decline to 77% by the end of Trefis forecast period. However, if the global PC growth rate slows down at a lower pace than what we estimate, Intel’s share may decline by a lesser extent. Additionally, the added features through innovation could help Intel justify and command a higher price point compared to its competitors.

If Intel is able to retain its market share at around 80% throughout the forecast period, there could be a 4% upside to our price estimate.

Our current price estimate of $30.62 for Intel stands at a premium of almost 19% to the current market price.

Understand How a Company’s Products Impact its Stock Price at Trefis

1. Intel launched third generation Core vPro processors, ARN, May 17, 2012 [↩]