Intel Corporation (INTC) Has Plenty of Opportunities in IoT Market

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Intel Corporation (NASDAQ:INTC) has had to navigate tougher waters ever since the weakness in the PC shipment started affecting its sales. Its dependence on the PC was enormous like Microsoft Corporation (NASDAQ:MSFT). Though there were opportunities in the mobile sector, it could not take full advantage of it as rivals overpowered it by their offerings that became cost effective too. In fact, its late entry caused a loss as it spent $10 billion for gaining one percent of market share in the 4G. It had to abandon its presence and started focusing on 5G. It remains to be seen whether it is also late or timely entry. Aside from that, the chip maker is seeing a number of opportunities in Internet of Things (IoT) and augmented reality as its acquisition in the space have nearly crossed $1 billion-mark. Let’s look at the three focus areas of the company as it was striving to bring back the old time.

Focus On 5G

Intel Corporation (NASDAQ:INTC) has been spending quite a large amount to gain market share in mobile by competing against its rivals like QUALCOMM, Inc. (NASDAQ:QCOM) and ARM Holdings plc (ADR) (NASDAQ:ARMH) apart from MediaTek. In a nutshell, the company’s tactics to win over the smartphone customers by offering discounts and subsidize OEMS failed to make any significant impact. That was quite evident last year when its share in the smartphone was only around 1% and that too among the second-tier smartphone makers. That was also very clear that it was only a losing battle and that there was nothing to gain significantly. The strategy was a costly one involving about $10 billion for a paltry market share.

That made Intel Corporation (NASDAQ:INTC) to focus on the 5G by dumping its Broxton and SoFIA, the two chipsets of 4G. There is sufficient time to be fully prepared for the launch of the 5G, which is expected to be around the year 2020. The next generation device would offer 100 times more speed in transferring the data than the 4G. The chip-maker is focusing itself on developing modems and chips for 5G technologies rather than the networks. The return of its executive, Evans, spoke about the importance attached to it. Reports suggested that the company’s LTE modems would likely to find a place in Apple Inc. (NASDAQ:AAPL)’s iPhones later in the current year. That is an important progress against its rivals and could turn out be a potential game changer in establishing a solid foundation for 5G presence.

Augmented and Virtual Reality

The two areas that are currently attracting big investments are Augment reality and virtual reality. Intel Corporation (NASDAQ:INTC) too started investing on it for quite some time as it believes that there is plenty of opportunities to grow for more number of companies than the chip making for selected few smartphone manufacturers. It would be joining big leagues that included Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc (NASDAQ:GOOGL), Facebook Inc (NASDAQ:FB) and so on. The company has already invested about $1 billion by acquiring firms engaged in either VR or AR. Some of the acquired companies included Omek Interactive for $40 million, Recon Instruments for $175 million and Basis Sciences for $100 – $150 million.

Intel Corporation (NASDAQ:INTC) started investing in both the segments in 2013 and has been steadily boosting its investments in the two sectors. The company initially started investing in such firms to be taken over later. There was only one publicly traded firm that it invested, which was Vuzix Corporation (NASDAQ:VUZI) by taking 30% stake in 2013. Analysts’ believe that its investment in Drone technology, as well as, IP could be leveraged in both VR and AR platforms though it was outside the scope. Though it was not a secret that the company has been investing on AR and VR, specifics surrounding them remained a big mystery for investors. Therefore, investors are left with hopes of expecting something fashionable on AR in the market place. In any case, that is key expansion.

IoT Opportunities

Another focus area for Intel Corporation (NASDAQ:INTC) is the IoT, where the number of connected services would be expanded. It has already established a strong ecosystem with a focus on Atom for the next generation gadgets like HoloLens of Microsoft Corporation (NASDAQ:MSFT) that performs on the company’s Atom only. Similarly, Atom has created a name for itself in the connected car market. Incidentally, the market is set to witness a big growth in the upcoming years. Aside from that, the chip maker would also use its Atom in the telecom space by launching 5G compatible modems. The company is also coming up with Atom architecture with SoCs based.

Intel Corporation (NASDAQ:INTC) sees a plenty of opportunities in IoT. The confidence is due to the expected growth in the number of connected devices throughout the world. According to estimation, the connected devices would climb to 200 billion by the turn of the current decade from just 15 billion connected gadgets recorded last year. That is a huge market where there is enough space to grab its slice of market. Of course, the chip maker might come out with fresh type of Atom chips for wearable’s, smart appliances, industrial robots and connected cars. The company expects such growth to complement its fresh systematic push into programmable chips and memory apart from data centers.

Conclusion

Currently, Intel Corporation (NASDAQ:INTC) is delivering revenue growth below the industry average in the last three-year period. That is the reason its shares are trading bellowing the PE, price to book and price to sales for the trailing twelve-month period. However, its return on equity and assets were better than the industry. The situation will change once the company started seeing the gains of its investments it made in 5G, AR and VR, and IoT.

Disclaimer: The opinions and data expressed herein by the author are not an investment recommendation and are not meant to be relied upon in investment decisions. The author is not acting in an investment advisory capacity, nor is this an investment research report. The author’s opinions expressed herein address only select aspects of potential investment in securities of the company or companies mentioned and cannot be a substitute for comprehensive investment analysis. Any analysis presented herein is illustrative in nature, limited in scope, based on an incomplete set of information, and has limitations to its accuracy. The author recommends that potential and existing investors conduct thorough investment research of their own, including detailed review of the companies’ SEC filings, and consult a qualified investment advisor. The information upon which this material is based was obtained from sources believed to be reliable, but has not been independently verified. Therefore, the author cannot guarantee its accuracy. Any opinions or estimates constitute the author’s best judgment as of the date of publication, and are subject to change without notice.

Viraj Shah

Viraj Shah has completed M.Com (Finance) and is currently pursuing his CFP. He tracks US markets along with other global markets like India very closely. He is very passionate about stocks, real estate, and technology. He also believes that money can always be made in the market.

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