Google (NASDAQ:GOOG), together with Sony (NYSE:SNE) and Logitech (NASDAQ:LOGI), will drive higher demand for processors like those made by Intel (NASDAQ:INTC) and AMD (NYSE:AMD), as a result of “smart TVs” like those compatible with Google TV.
Google recently introduced Google TV which is expected to be available to consumers in the fall of 2010. Google TV is a service through which users can search for websites and watch videos, movies and TV programs through an internet-connected TV. Google will embed its Android software into TVs manufactured by Sony and is partnering with Logitech and Intel to provide Atom processor-based TV set-top boxes that can make Google TV compatible with existing TVs.
We estimate that there could be an upside of more than 5% to the $23 Trefis price estimate for Intel’s stock if Google TV can help Intel expand its addressable market by 30 million processors by the end of Trefis forecast period.
TV Market Expected to Reach 300 million by 2016
According to DisplaySearch, a market research firm, around 211 million televisions were sold in 2009 and this could increase to 228 million in 2010. We estimate that the TV market could reach in excess of 300 million by 2016 and that around 10% of these televisions could be compatible with Google TV by incorporating processors like Intel’s Atom. This provides an opportunity for Intel (or its main competitor AMD) to sell up to an additional 30 million processors by the end of the Trefis forecast period.
TV Market Expands Chip Market
Intel’s primary markets today are the desktop, notebook and netbook processors markets which are driven by demand for PCs, tablets and other mobile computing devices. Additional demand for smart TVs, which incorporate processors like Intel’s Atom processor, is equivalent to higher demand for notebooks and netbooks since demand for such devices (smart TVs, notebooks, netbooks) all drive sales of processors.
We currently estimate that the total addressable market for Intel notebook and netbook processors will increase from 150 million units in 2009 to around 230 million units by the end of Trefis forecast period. This market currently includes notebook and netbook processors sold by Intel’s competitor AMD as well as two types of Intel processors sold:
- Core and Celeron processors used in notebook PCs
- Atom processor, a low power processor used in a range of devices like netbooks, smartphones and tablets
By modifying our forecast for notebook shipments above, you can approximate the impact of additional processor demand as a result of Google TV. There could be more than a 5% upside to the $23 Trefis price estimate for Intel’s stock if Intel’s addressable processor market were to exceed our current forecasts by 30 million units by the end of Trefis forecast period.