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Intel and Qualcomm Battling for Supremacy


The winner? Consumers.

Intel (INTC) will be reporting after the close tonight. If you care, its results will be in the top half of guidance. The outlook for the March quarter should be fairly positive, given the fact that prominent notebook ODMs Compal and Quanta have raised its expectations for the first quarter.

Aside from the usual focus on short-term results, there's a much more interesting confrontation developing on a different front. The recently completed Consumer Electronics Show was largely a showcase of everything you can think of connected to the Internet. This broad segment of devices -- mobile, portable and fixed -- will all require some form of CPU along with a variety of ancillary logic, I/O, and memory.

Intel sees this market as a logical extension of its x86-based CPUs and addresses it with a trimmed-down and low-power Atom family of processors. However, because many of these devices have no need to run Windows as an operating system (often called an OS), the demand for x86 compatibility is superfluous.

For example, netbooks or any other types of mobile Internet devices are intended primarily for "sufin' the net". Consequently, the primary need is a Web browser, not applications compatible with the underlying OS. As a result, this leaves the landscape wide open for design-wins and the competition is heating up quickly.

Samsung won a prominent socket for its applications processor with the Apple (AAPL) iPhone and Texas Instruments (TXN) OMAP family of applications processors is considered to be the performance leader. Plenty of others will enter the fray but none poses as significant a challenge to Intel's supremacy over the next two to three years as Qualcomm (QCOM).

Qualcomm introduced its Snapdragon processors several years ago but, until recently, it has been solutions looking for a problem. Like the overwhelming majority of the Intel competition, Snapdragon is based on an ARM-core. ARM is a microprocessor design house in the UK that developed a family of very powerful, yet extremely low-powered, processors that have been licensed by dozens of companies. It's been at the center of the handset world for many years.

What makes Qualcomm so dangerous is its scale coupled with its expertise in the mobile environment (i.e. RF and power consumption).

An interesting aspect of this coming battle is that each company has started targeting the market from a different perspective.
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No positions in stocks mentioned.
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