Intel announced a deal to acquire German Infineon Technologies’ wireless unit for $1.4 billion. Intel is seeking to enter the expanding smartphone market, whilst at the same time, cutting its dependance on the personal computer market. The wireless unit, WLS, manufacturers mobile chips that are in Apple Inc’s iPhones as well as handsets manufactured by Nokia and LG Corp. This acquistion is both a technology purchase and a business purchase. It secures Intel’s presence in the smartphone market, and importantly, stops someone else from acquiring this particular chip manufacturing technology.
Notwithstanding the economic downturn, the smartphone market is on an upswing, with consumers increasingly seeking devices that are well designed with innovative features and applications such as touch screen technology, wireless fidelity (Wi-Fi) and location-based service (LBS). These devices continue to be status symbols in the consumer and enterprise markets. In the next couple of years, software is expected to play a major role in the mobile handset market, along with more standardised hardware design. Mobile operators are likely to partner with significant participants from the Internet community, the media and the entertainment industry to further boost the appeal of advanced handsets. The smartphone market will remain highly fragmented in the next five years. Although traditional participants across the smartphone value chain will continue to dominate the market, more collaboration between consumer electronic device manufacturers is expected and new technology vendors will be the trendsetters in the mobile market.
Consumer demand for the ultimate converged devices to support multiple functionalities such as touch screen, camera/video support, dual simcard provisions, Wi-Fi and integrated global positioning system (GPS) is anticipated to spur demand for smartphones. Furthermore, social media and Internet communities, as well as application developers, are likely to gain control and prominence in the wireless and mobile market, resulting in more collaboration across the value chain. Innovation, combined with the strategy of differentiating products, will be one of the most prominent factors in achieving significant growth.
However, falling average sale prices will continue to affect the revenue growth rate of this market. Additionally, diversified operating system (OS) platforms; intense competition among smartphone manufacturers and poor battery life of smartphones to support multiple access technologies will affect the smartphone market in the next 4-5 years. There is a large battlefield in terms of mobile operating software (MOS) providers, with several terminal vendors opting for a different platform for each type of client device. This trend will continue over the next 2-3 years. Greater competition amongst MOS providers will also lead to intense competition among PC OS manufacturers. This, however, does not necessarily translate directly into lower margins for the mobile market. Branding is also important for participants capable of selling the perceived value-add of their product and capturing the subsequent premium price.
Source:http://www.companiesandmarkets.com/news/intel-acquires-infineon-wireless-unit-to-enter-smart-phone-market-n105.aspx
