Thursday, May 26, 2016

Here's Why May Be 's Smartphone Partner

Anybody familiar with the PC space knows that is one of the most trusted brands for PC motherboards, monitors, graphics cards, and notebook/desktop computers. Its products are competitive, reliable, and perform well. It's a name that's trusted by many and, as a result, it seems that as continues its push into ultra-mobility, will be a prominent player and perhaps a driver to potential success for in this market.
The ZenFone is a grt first stepAt CES, announced a line of smart known as the ZenFone lineup. These are incredibly solid that -- for the asking prices -- should do quite well in markets where LTE is not currently widesprd (these use 's XMM 6360 modem, so 3G only). They are powered by 's Z2500 family of Atom SoCs and compared to its peers in the $99-$199 unsubsidized price range, the performance is at lst as good as what competitors are shipping, if not better.
According to Digitimes, plans to sell about 5 million of these ZenFone products during 2014, making 's largest smartphone processor customer. The goal for 2015 is 10 million units, or about double 2014 levels. From a revenue standpoint, it is unlikely that is erating much; in fact, it wouldn't be a surprise if these processors required contra-revenue to offset a high bill of materials relative to other c smartphone chip solutions. That said, this gets in the door.

Is this a potentially fruitful multiyr partnership?
At Mobile World Congress, announced a multiyr, multidevice partnership with . mobile executive, Hermann Eul, indied that and had both signed on for such partnerships and that these partnerships would span and tablets utilizing 's entire portfolio of products.

's Tangier SoC, part of the Merrifield platform, is shown on the right. Source: .

Now, while is no , the partnership here couldn't be more obvious. needs to brk into the mobile market where it faces Qualcomm , an extremely powerful incumbent. It also faces the fact that , which owns 15% of the smartphone market, designs its own chipsand also that -- which designs its own chips and builds chips for the likes of Qualcomm as a foundry -- owns 30% of the market. This lves just 55% for the rest of the world (the is actually smaller as designs its own silicon, too).

's job is to make companies like strong
isn't going to win this market by winning over or , so what it does need to do is to build up some of these smaller friends from the PC market to be formidable players. If the likes of , , and even (which actually dumped 's chips in for 2014, but could be back in 2015 when 's product portfolio improves) could be made into formidable alternatives, then could still win that way.

How does do this? Well, (among others like ) bring to the table solid engineering prowess and established consumer brands. will be able to bring solid silicon as well as a major international brand to the table, helping these smaller players more effectively fight and . This isn't something that'll be sy given the current state of the market, but has invested too much in mobile to not pull every lever it can to gain share.

Foolish bottom line
With the ZenFone, and showed that they could put together a rlly compelling low-end phone for cost-conscious markets. However, this partnership is likely to extend much further and it wouldn't be a surprise to see some higher-end shipping in the U.S. built by this yr. isn't a , but there's no fundamental rson why can't take a big piece of 's smartphone pie with backing it -- assuming, of course, that gets its mobile-chip story straightened out.

Are smart old news?
If you thought the iPod, the iPhone, and the iPad were amazing, just wait until you see this. One hundred of 's top engineers are busy building one in a secret lab. And an ABI Resrch report predicts 485 million of them could be sold over the next decade. But you can invest in it right now... for just a fraction of the price of AAPL stock.

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