Despite Margin Risks, Intel Corporation (INTC)’s Mobile Plan Is Necessary

While there is a possibility that margins may suffer, it’s better for Intel to take that hit than let the competition take over the market. It seems Krzanich has a similar opinion. When asked about the potential cannibalistic effect of Bay Trail during the earnings call, he stated, “At the end of the day, the market will go where the market goes, and better to have a product like Bay Trail that we can play no matter where it goes rather than miss that market.”

Also, according to Intel Corporation (NASDAQ:INTC), Bay Trail will have better margin dollars than previous Celeron models, and its upper price range will be priced like Celeron, so the risk of hurting margins and Haswell is somewhat minimized. Additionally, Intel’s Core processors are superior to Intel’s earlier Atom chips, which helps protect the higher prices Core processors command.

Some second-half mobile opportunities

The margin risk that Intel is taking has created some opportunities in mobile computing in the second half. Hewlett-Packard Company (NYSE:HPQ) announced a fanless tablet with Haswell for later this year. Fans take up space and battery life, so a fanless design, along with the processing power of a Core chip, is a very compelling product for tablets.

Also, Bay Trail will bring x86 tablets that cost less than $150 to the market. This, along with Microsoft Corporation (NASDAQ:MSFT)’s update of Windows 8.1, present some intriguing mobile opportunities for Intel and the traditional PC market. Overall, the margin risk Intel Corporation (NASDAQ:INTC) is taking with its mobile strategy is necessary.

The article Despite Margin Risks, Intel’s Mobile Plan Is Necessary originally appeared on Fool.com and is written by Alvin Gonzales.

Alvin Gonzales owns shares of Microsoft and Intel. The Motley Fool recommends Intel. The Motley Fool owns shares of Intel and Microsoft. Alvin is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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