Earlier this month, Intel announced they were getting back into the semiconductor market for mobile phones, a market they just recently left in 2006. So why the change of heart? Increasing interest in high-end, high-powered devices for one. As consumers become more interested in using their mobile phones for more than just making calls, they need devices that have more horsepower. For Intel it means an opportunity to be that horsepower, and power new smartphones entering the marketplace.

Below is a chart that compares smartphone interest to the number of smartphones actually on the market over the past two quarters (Q4 2007 – Q1 2008). Each bar below represents the percentage of shoppers on carrier sites that shopped for a smartphone each week. The line represents the percentage of carrier portfolios that consisted of smartphones. Basically, if the bars are above the line it means that interest is disproportionately high given the number of smartphones on the market.

• In October 2007, there was only a 3% difference between share of interest and share of portfolio. By March 2008, that gap had doubled to 6%
• The number of smartphones in carrier portfolios has basically remained constant over the last two quarters, while interest has increased

Our historical data have shown that in most cases share of interest and share of portfolio eventually converge (the line will rest at the top of each bar). Currently share of interest is greater than share of portfolio, which means that more smartphones should be coming to the market to keep up with the demand. And you know what that means…

In reality, it’s not as simple as that. Do consumers even care about which brand of semiconductor is in their smartphone? Do they even know that semiconductors power their mobile phones? Can Intel pull off another branding campaign like “Intel Inside” to differentiate their chip from the others? Or will smartphone chips become a commodity product? I’m out of time here, so I guess those are questions for a different post!

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