Intel Reads the Global Smartphone Tea Leaves Correctly

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By Jacob Maslow

intel headquarters in mission college blvd of santa claraIntel (NASDAQ:INTC) recently announced that it was going to be producing mobile chips that cost very little. Dubbed as the Sofia Project, these low-cost chips are geared specifically for the Chinese market. In China, the fastest growing mobile market segment is handsets that cost below $100. China is hardly alone in this market. Many emerging countries have growing populations of middle-class people who demand smartphones that are priced below $100. Of course, the name of the game is the lower the price, the better.

With that said, Intel is definitely seeing a great opportunity for growth in the mobile phone chip market. This isn’t exactly Intel’s forte. Intel is the No. 1 player in the notebook and desktop markets. However, those markets are declining. Intel knows this. The hottest and fastest-growing segment in the computing space is in the mobile chip space.

If Intel plays its cards right with the Sofia chip, this can blow the door wide open as far as mobile phone and tablet pricing are concerned. As I have consistently noted before, the name of the game as far as mobile gadgets are concerned is a race to the bottom. It’s not a race to big brands like Apple or Samsung. It’s always been a race to the bottom. Eventually, the wireless mobile computing space will evolve to the point where people would value their mobile experience based on the cloud content they access instead of the actual devices or operating systems they use.

If Intel plays its cards right, it can gain serious inroads in this market and beat back Qualcomm and Taiwan’s MediaTek. It needs to do this because this is the segment of the hardware chip market that is showing robust growth.

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