More than defending its "presence in data centers," Intel Corp.'s recent decision to buy Altera Corp for $16.7 billion is said to be a move towards investing in the "Internet of Things (IoT)." This will definitely rival against Google's own IoT system: Project Brillo and Weave.

Record year deal

Intel Corp. reportedly said on Monday that they are going to pay $54/share in cash for Altera Corp., a maker of programmable logic semiconductors. The buy was a premium of 11 percent over Altera's closing share price on Friday and 56 percent from March 26.

Similar with other chipmakers, Intel is also seeking to contend with growth and rising costs, at the same time "defending" their most profitable business: supplying server chips used in data centers. The investment world saw the "largest deal ever in the $300 semiconductor business" where Avago Technologies Ltd. agreed to purchase Broadcom Corp. for a whopping $37 billion.

Now that the Intel and Altera partnership happened, it made 2015 a "record year" for such semiconductor deals.

Further, Intel said that they will combine their technologies with Atlera's. The company said, "The acquisition will couple Intel's leading-edge products and manufacturing process with Altera's leading field-programmable gate array (FPGA) technology. The combination is expected to enable new classes of products that meet customer needs in the data center and Internet of Things market segments."

Internet of Things

Specifically, Intel will "bundle its processing chips with the smaller company's (Altera) programmable chips" that are used to speed up Web-searches. Intel is reportedly also working on investing more in the "Internet of Things (IoT)," which basically connects ordinary household devices to the Internet.

Moor Insights and Strategy President Patrick Moorhead said, "They are very rapidly are getting their act together to be a player in the Internet of Things market, and Internet of Things is really about 50 different submarkets underneath it. But you can generalize it and you can talk about let's say the consumer side which I call the human internet of things and these things are like fitbits, exercise watches and things like that."

Google is also moving into this direction as the search engine company unveiled in their I/O conference their "polished-down" Android version Project Brillo. This will help the company "manage the Internet of Things" along with its connected devices. Project Brillo will be coupled with Weave, which will allow IoT devices to communicate with each other.

It seems that the potential for "Internet of Things (IoT)" is huge since Intel and Altera would be new players in the market. Google will be contending with them in the years to come.