Intel aims to be a powerhouse in mobile
Part of the concern about Intel's mobile future comes from its recent history. In 2006, Intel sold its unprofitable StrongARM business (whose products were based on the ARM architecture) to Marvell Technology Group for $600 million. Intel "dropped ARM prematurely," Enderle said. "They lost market momentum and have to rebuild it from scratch and acquisitions."
Infineon makes ARM-based chips used in the iPhone and other smartphones, but that business alone will not propel Intel into a strong mobile position, analysts said.
The Infineon division that Intel is acquiring has about a 5% of the mobile chip market. Qualcomm, Texas Instruments and STMicroelectronics are the biggest players, accounting for half the market for mobile processors and radio chips in cell phones, according to Gartner.
Tristan Garra, a financial analyst at Robert W. Baird & Co., said buying Infineon may be "too little, too late" for Intel in the smartphone market. And Craig Berger of FBR Capital Markets wrote a note saying he was skeptical about Intel's ability to execute in the mobile market or other businesses beyond microprocessors for personal computers.
Intel invested a great deal in high-speed WiMax technologies, but analysts said the company will also need to perform in the much bigger 4G market for LTE wireless technology. Perhaps Intel's $6 billion annual R&D budget will make a difference there, analysts said.
Even if it offered futuristic mobile chips, analysts said Intel would still need more than chips to succeed; it might need to find a hardware partner to build smartphones with its chips.
"At the end of the day, Intel has to build something that users find compelling, and they've got to find somebody to build it for them, something that's an Intel-based iPhone," Enderle said. "That's possible, but until they do that they aren't going to be successful. This market is defined by devices, not components."
Dulaney argued that any Intel-based smartphone hardware would also need to run on a major mobile operating system, not just the relatively young MeeGo. "Intel probably needs to get one of the major OSs to commit to them, like Symbian, iOS or RIM," Dulaney said. "They have Android support, but so does everyone else. And MeeGo has a long way to go."
Matt Hamblen covers mobile and wireless, smartphones and other handhelds, and wireless networking for Computerworld. Follow Matt on Twitter at @matthamblen, or subscribe to Matt's RSS feed. His e-mail address is firstname.lastname@example.org.
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