QUALCOMM, Inc. (QCOM): Can Intel Corporation (INTC) Become a Force in Mobile?

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As Intel Corporation (NASDAQ:INTC) looks toward its future — and the prospect that being chipzilla is less important when the chips it makes are no longer flooding into PCs — establishing a significant footprint in mobile has never been more critical. This was likely one of the primary motivators behind its efforts with Tizen, the new smartphone operating system being designed in partnership with Samsung in others. This is not to say that Intel is not making efforts on the PC side, simply that its involvement with Samsung in balancing the market share against the continuing spread of Google Inc. (NASDAQ:GOOG)’s Android has the potential to revamp the company’s focus a bit.

QUALCOMM, Inc. (NASDAQ:QCOM)

The importance of Tizen
If you have followed the growth of Android at all, you are already aware that in four short years the operating system has gone from newcomer to the name to beat. Research firm IDC puts Android’s market share at 68.3% for 2012, with Apple Inc. (NASDAQ:AAPL)’s iOS a distant second with 18.8%.  While these numbers are impressive, they get even more extreme in the emerging markets; late last year, where the overall smartphone market was showing a 46% growth rate, that figure was 63% in the emerging markets. Apple has very little penetration into these markets, helping to explain why Android has been able to grow so fast.

Behind this growth, however, is a significant problem that Tizen looks to correct. Google’s web applications, which form the integrated programs that are native to Android, are not the preferred option in most of Asia. While we all remember Google’s noble departure from China when the local government told the company that it had to either allow snooping or depart, options such as Baidu and Naver are preferred in most of these countries. The availability of a huge ecosystem and free software have led to the wide adoption of Android in spite of these limitations, but many manufacturers build complex user interfaces that largely strip away much of Android’s functionality.

In an attempt to address this problem, Google Inc. (NASDAQ:GOOG) and Samsung have banded together, joined by an amalgam of Asian telecoms — think Huawei and others — to create a new open-source OS that will challenge Android. Functionally, early reports suggest that the look and feel will be very similar to Android — because Google and Samsung have recently run short off things to sue each other over — but the even-more-open Tizen will give specific manufacturers that ability to more easily use other applications.

While no formal announcement has been made, you should assume that as an integral part of its role in helping to develop the new OS, Intel Corporation (NASDAQ:INTC) is endearing itself with all of these manufacturers. Samsung is expected to release a high-end, Tizen-based smartphone by the end of the summer that will directly compete with its own Galaxy S4. As the Tizen ecosystem is developed, assuming it can get a solid foothold, it will make the entire market more interesting.

What will be very interesting is how Google’s Motorola reacts to the news. Going back to Jan. 2012, Motorola and Intel have continued to deepen their partnership. Where most U.S. version of the Razr line uses QUALCOMM, Inc. (NASDAQ:QCOM) chips, Intel got most of the European orders. The critical differentiator was Qualcomm’s superiority in 4G LTE. In Europe, where the protocol was at a different stage of development, this distinction was not critical and Intel chips were used.

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