Intel Corporation Wins a Lenovo Smartphone

At the 2015 International Consumer Electronics Show, Lenovo announced a smartphone known as the P90. An Intel Z3560 processor and XMM 7262 LTE-Advanced modem power the device, which features a 13 megapixel rear-facing camera and a 5 megapixel front-facing camera. This marks the second publicly announced win for Intel's Moorefield smartphone platform (following the ASUS ZenFone 2).

Intel is finally back inside of a Lenovo smartphoneWhen Intel launched its first viable smartphone system-on-chip, codenamed Medfield, Lenovo used it to power its K800 phone. Then, when Intel launched its Clover Trail Plus platform about a year later, Lenovo picked it up for its K900 "phablet".

However, when Lenovo launched the successor to the K900, known as the Lenovo Vibe Z, Intel found itself replaced with a QualcommSnapdragon 800 solution. The Vibe Z2 Pro, the follow-on to the original Vibe Z, also featured a Qualcomm processor.

Some took this to mean that the Lenovo/Intel relationship in ultra-mobile devices was over, but others -- apparently correctly -- argued that this was more of a product problem on Intel's part. With no viable LTE modem solutions and lackluster applications processor offerings throughout 2013 and the first half of 2014, there's simply nothing that Intel could have supplied into competitive mid-range or high-end smartphones in that time frame.

With the Atom Z3500-series of applications processors and the XMM 726x family of LTE-Advanced modems, Intel finally has chips that can power competitive mid-range -- and even some high-end -- smartphones. It's no surprise, then, that Lenovo is reuniting with Intel.

What does this mean for Intel and Lenovo longer term?Lenovo, like any smartphone vendor, wants to offer the most competitive products that it can, at the best cost structure possible. With that in mind, to the extent that Intel can deliver competitive parts on a price-performance basis, I believe Lenovo will use Intel parts.

As I have written previously, Intel's 2016 smartphone processor lineup should have chips properly designed for each different tier of smartphone (value, mid-range, high-end). To my knowledge, Intel is only powering the Lenovo P90 (an upper mid-range phone), with Qualcomm/MediaTek powering the rest of Lenovo's lineup. If Intel actually delivers competitive products next year, I could see Intel powering even more Lenovo phones going forward.

The implicationsFor a while it looked as though Apple and Samsung were the only two relevant smartphone players, but over the years, that dynamic has shifted substantially. According to research firm Gartner, Samsung and Appleonly shipped a combined 37.1% of all smartphones in the third quarter of 2014 -- down from 44.2% in the same period a year ago. Other, smaller players are making headway.

Lenovo, which is one of the top smartphone vendors by unit shipments, actually saw its market share drop from 5.2% in the third quarter of 2013 to 5% in the third quarter of 2014. However, it still shipped over 15 million units, up from 12.89 million in 2013.

Given that Intel has essentially 0% of the smartphone applications processor market, any headway it can make should be welcome news to Intel shareholders. Furthermore, as Intel builds credibility with traditionally PC-focused partners like Lenovo, other smartphone vendors may begin to at least consider Intel solutions once they're proven.

All told, as an Intel stockholder, I'm encouraged to see Intel winning smartphones that actually seem compelling. And as non-Samsung/non-Apple vendors continue to gain share in the overall smartphone market, the opportunity that Intel will have as its product portfolio improves could be quite attractive in the long-term.

The article Intel Corporation Wins a Lenovo Smartphone originally appeared on Fool.com.

Ashraf Eassa owns shares of Intel and Qualcomm. The Motley Fool recommends Apple and Intel. The Motley Fool owns shares of Apple, Intel, and Qualcomm. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.