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Intel Becomes a Sponsor of Olympics, VR & Drones in Focus

Zacks Equity Research

Intel Corp. INTC recently announced that it has signed up as a sponsor for the International Olympic Committee (IOC) till 2024. Per the terms of the deal, Intel will be spending $400 million in cash and kind for the global sporting event.

Intel joins other prominent names like Samsung SSNLF, Coca-Cola and Alibaba BABA. The deal was announced after a week, following long-time sponsor McDonalds' MCD withdrawal of its sponsorship deal three years early due to some cost reductions.

Intel is looking at this deal as an opportunity to showcase its 5G platform, virtual reality (VR) and drone technology. "Through this close collaboration with the Olympic family, we will accelerate the adoption of technology for the future of sports on the world's largest athletic stage," said Intel CEO Brian Krzanich.

We believe this platform will help Intel’s technology to reach a larger audience, which will eventually add to its customer base and subsequently drive its top line.

Increasing Adoption of VR & Drone Technology

Per IDC, augmented reality (AR) and VR spending will witness compound annual growth rate (CAGR) of 198% in the 2015 – 2020 time frame to reach approximately $143.3 billion.

In a recent report, Gartner stated that almost 3 million drones are expected to be shipped in 2017 with overall revenues expected to be almost $6 billion with an increase of 34%. The market could be worth over $11.2 billion by 2020.

With VR and drones gaining traction, Intel can ride the momentum with its flagship products like Falcon 8+ Drone, Yuneec Typhoon H, True VR and others.

Moreover, these technologies are steadily making their mark in the sports industry. With football and basketball practice sessions already being played in a VR environment and commercial drones being widely used for capturing footage of matches, the entire sporting experience is undergoing a transformation.

We note that with the new sponsorship contract, Intel is well placed to grab a strong foothold in the market, as IOC is planning to augment the use of these technologies at the events. These developments are likely to have a positive impact on Intel’s revenues.

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