In an early June article here, I wrote that Intel’s (NASDAQ:INTC) acquisition of Altera (NASDAQ:ALTR) with its FPGA lineup will propel Intel into market leadership in Smart Technology/IoT. Based on the responses it didn’t seem like my argument was convincing.

Technology moves quickly and Intel’s position in the industry has proven that until now its efforts in IoT have generated a lot of money but with slow growth. Intel’s “Internet of Things” initiative envisions intelligent devices, end-to-end analytics and the connection of legacy devices to the cloud as the drivers of business transformation, as shown in the graphic below.

In its latest quarterly earnings call, Intel reported a 10% year-over-year decline in PC sales, which was pretty much expected, which was offset by Data Center business growth of 10% year-to-year, 40% growth in NAND memory sales and 4% growth in the IoT business.

Several events fortify my thesis that the acquisition of Altera will enhance Intel’s position in the IoT market and boost the company into market leadership.

During its latest quarterly earnings call, CEO Brian Krzanich noted that indeed Altera’s FPGAs would be used in Intel’s IoT strategy:

“Finally, integrating Altera’s world-class technology with Intel architecture in the high-growth data center and Internet of Things market segments will create new product categories and capabilities. We expect this strategy to produce significant shareholder value, and we’re looking forward to implementing our plans. We plan to have a deeper discussion on the value drivers underlying this strategy at our investor meeting this fall.”

“Altera has joined the Industrial Internet Consortium, a collaborative industry organization facilitating development of a global ecosystem for the Internet of Things (NYSEMKT:IOT). Founded by AT&T, Cisco, General Electric, IBM and Intel in March 2014, the Industrial Internet Consortium catalyzes and coordinates the priorities and enabling technologies of the Industrial Internet.

Altera FPGA, SoC and power products already play a significant role in enabling connectivity in RF wireless systems and machine-to-machine communication networks. Programmable logic is applied extensively in factory automation and smart grid applications, supporting high-performance control and analytics that enhance the efficiency, safety and security in advanced manufacturing and power systems. FPGAs are also being deployed in next-generation automotive and medical IoT systems, and in smart city applications, such as intelligent lighting and traffic management systems that incorporate high-performance embedded vision and video analytics capabilities.”

To the naysayers who pooh-poohed my contention that FPGA’s would be used in IoT, we see that indeed they are being used.

Altera recently revealed architectural and product details of its next generation of high-end programmable Stratix 10 FPGAs and SoCs. Interestingly, Altera uses Intel’s 14 nm Tri-Gate process, providing 2X higher core performance over Altera’s previous high-end family. The benefits of Intel using Intel’s 14 nm Tri-Gate will facilitate improvements in the FPGA’s performance and a reduction in price as Intel enhances its technology to 10nm, probably in early 2017.

hird, I noted in my previous article:

“In Smart Technology/IoT, a microcontroller/processor is part of a sensor network that’s capable of performing some processing, gathering sensory information and communicating with other connected nodes in the network along with a transceiver and one or more sensors.”

On the microcontroller side, according to an article in Electronics Specifier, here:

“First details of an x86 code-compatible MCU targeting the IoT have been revealed by Intel, with reference to a roadmap of devices in the less than $1 range. One device, code named ‘Mint Valley’ is expected to be priced at around $0.50 in volume. Although not officially launched, the family of MCUs will put Intel firmly in the picture for low cost, low power MCUs needed to empower the billions of IoT nodes expected to be developed and deployed over the next five years.”

“Wind River Intelligent Device Platform* XT 3 available preconfigured with the Wind River Helix Device Cloud agent and with new flexible packaging options for applications that require a low cost of entry. Support for Intel Atom processors will be available in late July 2015. Support for Intel Core and Intel Quark processors will be available in late August 2015.

Intel and Canonical are collaborating around Intel IoT Gateways and Snappy Ubuntu Core. The Intel IoT Gateway will come with support for Snap Stores, where a range of applications will be deployed to a gateway.

Microsoft-based Intel IoT Gateways will align with the Windows 10 IoT launch in the second half of 2015. As part of this effort, Intel and Microsoft are working closely to enable Windows 10 IoT on the existing Intel Atom processor based gateways currently available in the market today. “

My analysis

Altera had sales of $414,162 for the last quarter ending June 26, 2015, but the exact breakout of revenues for IoT products is difficult to discern at this time. FPGAs represented 83% of revenues and new products, which include the Arria 10, Stratix V, Stratix IV, Arria V, Arria II, Cyclone V, Cyclone IV, MAX 10, MAX V, HardCopy IV devices and Enpirion PowerSoCs, represented 53% of revenues. So IoT revenues may be as high as $150,000.

But that’s just the start – IoT is about the future. Intel estimates that 50 billion devices will be connected to the Internet of Things by 2020. According to our report “Convergence of Semiconductors and Smart Technology – A Market Analysis,” microcontrollers (MCUs) used in Smart Cities, Smart Homes, Smart Industry, Smart Health and Smart Transport (a subset of the Internet of Things), represented just 10% of the overall MCU market in 2014. But in 2020, $10 billion in MCUs, representing 40% of the total market, will be used in these applications.

http://www.insidermonkey.com/blog/intel-is-pushing-aggressively-into-the-internet-of-things-363946/