On Thursday February 10, 2011 in a change to its long-standing strategy of developing integrated processors, Qualcomm revealed details of its first stand-alone apps processor, APQ8060.

Also, HP announced new webOS devices including the HP Veer, Pre 3 and TouchPad tablet. All three products feature Qualcomm's Snapdragon processors. What's really interesting is that HP's Wi-Fi-only TouchPad spec sheet listed an apps processor product from Qualcomm, the APQ8060, which appears to be a stand-alone apps processor variant of Qualcomm's 3G/4G version MSM8x60. Qualcomm so far has had limited success in the tablet market with design-wins at Dell, Huawei and Viewsonic. The HP TouchPad raises Qualcomm's profile in the tablet market and makes it a strong contender.

As we noted previously in our reports, the tablet market is both a threat and opportunity for baseband-integrated vendors, especially vendors who rely on baseband-integrated products. It's a near-term threat because it will leave integrated vendors without apps processor products to address the Wi-Fi-only tablet market. It's a long-term opportunity as mobile operators push for 3G / 4G connectivity to increase their mobile broadband subscriptions, a favorable scenario to Qualcomm.

We think Qualcomm's recent Atheros acquisition and the latest APQ8060 stand-alone apps processor product address this near-term tablet market threat as Qualcomm can compete for more semiconductor dollar content in a wide variety of markets where 3G / 4G connectivity is currently not that important. Over time, many of these product categories will feature 3G / 4G connectivity, playing to the strength of baseband vendors such as Qualcomm.

As for smartphones, we continue to believe that integration will continue to win as the smartphone market fragments into different tiers. This week Broadcom announced its first HSPA+ smartphone apps processor BCM28150 which integrates 1.1GHz dual ARM Cortex-A9 cores. This product is similar to Qualcomm's MSM8x60 and ST-Ericsson's U8500 / U5500. We estimate that 70 percent of smartphones will be shipped with a baseband-integrated apps processor in 2015. Qualcomm, ST-Ericsson, Broadcom, Renesas, Intel, MediaTek and Marvell are expected to be leading integrated apps processor vendors by 2015.

Multi-core processors are the name of the game in high-end smartphones and tablets in 2011 and are increasingly becoming an essential marketing and technology strategy for every handset vendor and silicon vendor. We estimate multi-core processor penetration in smartphones will rise from 15 percent in 2011 to 45 percent in 2015, and that ARM's Cortex-A9, Cortex-A5 and Cortex-A15 and Intel's x86 architectures will fuel the multi-core processor growth in smartphones over the next few years. 

In 2010, over 45 percent of Android smartphones shipped with a 1GHz or higher processor, hitting the ceiling on what is possible with a single core processor. Adding a second core is the logical next step to boosting the speed without raising the power consumption in handheld devices such as smartphones.

Samsung, Qualcomm, NVIDIA, ST-Ericsson, Texas Instruments, Marvell, Renesas and Broadcom are well positioned to capture share in the smartphone multi-core processor market. Freescale recently announced its i.MX 6 processor family but the company has less visibility when it comes to smartphone design-wins.

Having largely won the single core smartphone apps processor market, baseband-integrated vendors are now faced with a multi-core processor challenge. We believe the smartphone multi-core processor market will be dominated by stand-alone apps processor vendors in 2011. By our estimates, baseband-integrated multi-core apps processor will account for about one third of total smartphone multi-core apps processor shipments in 2011 with the potential for higher share in future.

Sravan Kundojjala