Phones, however smart, are now commodities like the pads, pcs and transistor radios that preceded them. The new frontier is video, specifically the creation of a new set top box (STB) that will control navigation, storage and sharing of digital television. The emerging class of devices will empower user choice and enable peer-to-peer capabilities. Further, the new technical capabilities will mesh with the 2016 FCC ruling that requires cable providers to permit 3rd-party hardware. Déjà Western Bell!
The change feeds two business areas important to Intel (INTC-$31), internet of things and data center operations. Intel IOT products are likely to be incorporated in video controllers from Cisco and some of the horde of STB manufacturers. There may also be sales opportunities in the TV market as app capabilities migrate from the phone. More significantly, Intel products will serve the data explosion consequent to the adoption of interactive video technologies and derivatives such as virtual reality and driving automation.
Success is not a given but there are few competitors that can compete at the scale of Intel design and production. Intel is a preferred provider for any of the cloud-based data service vendors. Even Amazon doesn’t have comparable chip foundry capabilities! While data center revenue is only about 28% of total, it is growing and represents a profitable future as the Company maintains a superior gross profit margin.
BizProf100
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