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Intel aims to be a powerhouse in mobile

But it might take more than the recent acquisitions of McAfee and Infineon's wireless chip unit -- it might take a phone that can compete with the iPhone

September 1, 2010 06:00 AM ET

Computerworld - Intel wants to be a force in the mobile computing world -- a fact that was made clear by the company's recently announced plans to acquire chip maker Infineon Technology's wireless division and security software provider McAfee.

But several analysts questioned whether spending billions of dollars on those two companies and others, and revving up the MeeGo mobile operating system in partnership with Nokia, can be enough to make much difference. Some say Intel has already fallen well behind the mobile curve and has a long way to go to catch up.

With the planned acquisitions of Infineon for $1.4 billion and McAfee for $7.7 billion and the 2009 purchase of mobile software maker Wind River Systems for $884 million, Intel likely will grow more focused on mobile, several analysts said. Those deals could help the company move beyond its primary role as a chip maker whose products are used in 80% of today's desktop and laptop computers but whose sales growth is nonetheless slower than smartphones and mobile devices.

"Becoming more vertical [in mobile] for Intel is about survival," said analyst Jack Gold of J.Gold Associates. "Intel knows it has to change with the times. The Internet of connected things means it's not just about the processor anymore. It's about connectivity -- hence the wireless acquisitions -- and it's about security to keep us safer when we are connected."

Ken Dulaney, a Gartner analyst, said Intel is "not yet a force in mobile, and historically they have been unsuccessful." Given the fact that Intel will encounter entrenched competition from Qualcomm and other chip makers that build ARM-based chips widely used in smartphones, Dulaney wasn't willing to predict how the company will do in the mobile market.

"We will have to wait and see," Dulaney said. ARM-based chips, which incorporate technology from ARM Holdings in Cambridge, England, work well at the low levels of power consumption required for smartphone and small devices. Intel has "never mastered" that energy-efficient architecture, he said, but he did acknowledge that Intel's next version of its Atom chip, called Medfield, "may be on the verge of improving power management."

Rob Enderle, an analyst at Enderle Group, said the Infineon purchase "gives Intel a foot in the door [of the mobile market], but they have to push Atom chips through that door." So far, he added, Intel "has taken an ugly approach to the [mobile] market."

The McAfee deal could help give Intel a comprehensive security approach, and mobile device makers might be interested in using future Intel chips if they had security baked in, Enderle said. "McAfee is much more than antivirus, and that includes encryption, which is arguably better than Research In Motion's," he said, referring to the maker of the popular BlackBerry smartphones.

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