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Intel Corporation (INTC): How Tremendous Is Its Tablet Opportunity?

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Intel Corporation (NASDAQ:INTC) has been working hard to shrink transistors to the point where its chips become more suitable for mobile computing applications. With tablets being the fastest-growing segment of mobile computing, it’s not surprising to learn that Intel wants to own a large piece of this pie. Not to mention, the tablet market is expected to ship more than 350 million units a year by 2017 — about the size of the PC market today.

Sizing up the market
Intel Corporation (INTC)In order to assess Intel’s addressable market, Apple Inc. (NASDAQ:AAPL), Samsung, and Microsoft Corporation (NASDAQ:MSFT) Windows RT devices must be taken out of the equation since they all utilize processors based on ARM Holdings plc (ADR) (NASDAQ:ARMH) designs. According to IDC, Apple is expected to command 46% of the tablet market this year, which represents about 88 million devices out of a possible 190.9 million devices. Assuming Samsung is good for another 17 million tablet shipments this year (like it shipped in 2012), Intel Corporation (NASDAQ:INTC) is left with about 86 million potential devices before taking into account Microsoft Windows RT tablets.

Photo: Intel Corporation (NASDAQ:INTC)

Once Windows RT is factored into the equation, there’s about 82 million tablet devices left for Intel’s addressable market. If we use NVIDIA Corporation (NASDAQ:NVDA) Tegra’s average selling price range of $20 to $25 as a proxy, this opportunity could currently be worth as much as $1.6 to $2 billion to Intel’s top line.

Public enemy No. 1
The first order of business for Intel is to gain an edge against NVIDIA, which commands about 17% of the tablet market. Considering that the tablet market more closely  mirrors the PC market in terms of user experience, Intel has tremendous potential to win over the hearts of tablet-makers and users alike — especially in the Windows tablet computing space. In other words, Intel Corporation (NASDAQ:INTC) has the power to evolve the tablet market into something much more compelling than today’s offerings.

Source: Intel.

Pictured above is Intel’s upcoming Bay Trail processor, which is expected to make a splash this holiday season. This x86-processor will be the world’s first tablet processor that will be based on 22-nanometer designs — a full generation ahead of the ARM competition. It will give tablet makers the capacity to design Windows 8 tablets that can run the full version of Windows 8. I believe that Bay Trail will ultimately pave the way for a $200 Intel-powered Windows 8 tablet in the future, giving Google Android and even Apple’s iOS a run for their money.

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