Mobile wars poised to enter a new phase

Posted by Trent Nouveau

Analyst Jack Gold believes the industry is currently experiencing the "preliminary battles" of a coming mobile chip brand war that could significantly alter the way consumers purchase mobile devices.

Indeed, says Gold, most consumers buy devices without knowing (or caring) which manufacturer supplied the chip powering the device. They are often confronted with marketing hype about the number of cores inside (they assume it somehow makes the device better if there are more of them) but rarely do they ask about the chip manufacturer.

Mobile wars poised to enter a new phase

"However, in the competitive mobile world and in smartphones especially, we are
beginning to see a shift in marketing focus from core counts to chip brand
recognition (e.g., Nvidia Tegra, Qualcomm Snapdragon)," Gold explained in an industry noted sent to TG Daily.

"To be sure, many of the chip vendors looking for more competitive advantage are attempting to create brand awareness for chips inside the newest 'hot' phones, much like Intel did so effectively with its “Intel Inside” branding in the PC marketplace."

According to Gold, Nvidia and Qualcomm especially need to create brand awareness to combat the rapidly emerging competitive threat from Intel.

"Intel has one of the worlds highest brand recognition ratings but so far has been unable to leverage this in the mobile market, as they have virtually no presence in smart phones," the analyst noted.

"This is due to competitive Atom chips being late to market and a lack of an integrated LTE capability which both Qualcomm and NVidia have announced. This is expected to change in the next 6-12 months, but for now, it signals an Intel weakness."

As such, says Gold, consumers should expect to see increased advertising that highlights the chip inside, much like we have seen for years around Intel in the PC market.

"How much effect this will ultimately have will depend not only on how well the chip vendors make the case for their devices, but also how well the mobile device vendors and ultimately the OSes take advantage of the performance and capabilities built into the latest processors. This means that chip producers can no longer solely rely on performance and cost, but rather must establish a meaningful brand presence in the marketplace.

"This favors the larger, more established and financially able players (e.g., Intel, Qualcomm), and if successful, could maintain margins for the vendors while limiting cost reductions in finished product for the brand recognized leaders. However, with so much distraction and multiple messaging taking place, it may be difficult for 'chip inside' branding to stick with consumers," he added.