Opportunity For Qualcomm Could Be A Setback For Intel

In a surprise move, Microsoft announced, at the hardware developer conference in Shenzhen, China, that it is collaborating with Qualcomm to enable Windows 10 on mobile computing platforms that will be based on Qualcomm’s Snapdragon chipset. This is a significant development for Qualcomm, because for the first time its Snapdragon processors will be used to power Windows devices. At the same time, this move will benefit Microsoft, as it can now have an alternate architecture (ARM) for its Windows 10 operating system. However, this partnership is likely to rub off negatively on Intel‘s dominance in the PC chip market, in which Intel commands majority of the market share. In this analysis, we discuss the implication of this partnership for Intel and Qualcomm.

Qualcomm’s Partnership Can Hurt Intel’s Dominance In The PC Chip Market

The PC chip market has traditionally been dominated by Intel, and the sales from PC chip shipments constituted more than 50% of its revenues in 2015. Intel is the inventor of the x86 architecture of microprocessors, which is used in most all of the personal computers today. For this reason, a slowdown in the personal computers in the last two years has weighed heavy on the company’s top-line. However, Qualcomm powering Windows 10 devices could be a double whammy for Intel.  The mobile phone chipset maker at the very least could foster growth on a Windows-capable alterntive to the PC based on an enhanced mobile wireless  computing platform.  Even beyond this, it could offer an actual PC powered by a Qualcom wireless computing device, further denting Intel’s revenues.

Nevertheless, the new devices powered by Snapdragon chipsets are expected to hit the market by the second half of 2017. In the near-term, therefore, Intel would continue to enjoy its dominance in the PC market. Moreover, Intel is continuously focusing on adapting its technology to alternate growth markets, which could offset any decline from its PC chip sales in the long run. Furthermore, Microsoft’s previous ARM-compatible operating system, Windows RT, had failed to gain traction among PC makers and was eventually stopped. Whether this partnership will be of significant gain for Qualcomm in the years ahead remains to be seen.

NOTE:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com

2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Intel

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