Intel Calls Upon Acer for Smartphone Collaboration
Trading up Thursday morning on news that it is heading into the smartphone business, Intel (NASDAQ: INTC) joins the likes of Yahoo (NASDAQ: YHOO) and Amazon (NASDAQ: AMZN) who have also been rumored to be launching cellular devices over the next few years. Intel Chief Executive Officer Paul Otellini's latest meeting with Acer has raised eyebrows over potential smartphone collaborations between the two.
According to DigiTimes, Intel dove into discussions with Acer about a possible partnership in the smartphone market. Intel intended to schmooze Acer executives to release "entry-level or mid-range smartphones" with the company's technology.
The meeting -- held with the purpose of discussing the smartphone business – took place on Tuesday in Taiwan. However, "Acer is expected to continue placing its focus on the PC business, the area the company is most familiar with, and will gradually adjust its strategies for smartphone and tablet businesses," DigiTimes reports.
Though certainly disappointing news for Intel, Acer's refusal to participate in the smartphone market does not handicap the company by any means. Intel announced on September 18 that it will supply the application processor for Motorola's new RAZR smartphones. Battery life is expected to be on par with some of the nation's leading smartphone manufacturers, such as Apple (NASDAQ: AAPL). The processor's performance is expected to give Motorola a competitive boost.
Beyond the smartphone market, Piper Jaffray recently noted that Intel is working on a direct to original equipment manufacturer (OEM) foundry partnership with Cisco Systems (NASDAQ: CSCO) as well to supply custom silicon. The new opportunity could bring in about $1 billion for Intel – a nice chunk of change for the company as its PC business continues to struggle.
Piper Jaffray stated, "the evidence is mounting that Intel is increasingly well positioned to generate success in the smartphone market. While the structure of the market makes winning with the right customers imperative, we don't think it's a stretch to believe if Intel can field market leading products that they will also have success with some of the market leading OEMs."
Intel is up 0.24 percent in pre-market trading on Thursday morning. The company, which closed at $22.65 Wednesday afternoon, is down 6.62 percent year-to-date. With new partnerships ready to kick off this fall, Intel's stock is poised to see positive long-term market results with increased analyst and consumer confidence, should everything go according to plan.
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