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Intel smartphone ambitions stunted by Nokia withdrawal

By Agam Shah
April 20, 2011 04:29 PM ET

IDG News Service - Nokia's move to the Windows Phone OS took the "wind" out of possible volume sales of Intel smartphone chips this year, but the chip maker has moved on, Intel CEO Paul Otellini said this week.

Intel is now redirecting resources to recruit other wireless carriers and phone makers to adopt its upcoming low-power Atom smartphone chip code-named Medfield, Otellini said on a conference call Tuesday.

Intel was hoping to see smartphones with its chips starting in the second half this year. Otellini said he would be disappointed if Intel-based phones were not available in 12 months. He did not comment on the smartphone companies Intel was pursuing, but analysts on Wednesday said that the chip maker could be pursuing smaller regional phone makers, and perhaps larger phone makers such as LG.

Intel has had no success so far in the smartphone space. The company currently offers a low-power Atom smartphone chip code-named Moorestown, which has found no adopters. Intel and Nokia last year partnered on the development of the Meego OS for mobile devices, but Nokia in February abandoned the OS to establish a future smartphone strategy around Microsoft's Windows Phone OS. Windows Phone OS does not work on Intel's chips, and Otellini said the crumbling of the partnership has forced Intel to pursue other companies to adopt Medfield.

Intel committed a lot of resources to Nokia around the Meego OS, but now has to restart efforts to get new customers to adopt Medfield, analysts said. That could delay the launch of Intel Inside smartphones, but devices will eventually come. However, the success of such devices in a market dominated by ARM processors remains a question mark, analysts said.

Intel could chase smaller vendors in developing markets where smartphone shipments are exploding, said Jack Gold, principal analyst at J. Gold Associates. Smartphone shipments are growing in countries like China, where companies such as ZTE and Lenovo are establishing a larger mobile presence.

"It's one thing to partner with Nokia, it's another thing to partner with [smaller vendors]," Gold said. Major vendors such as Nokia bring volume shipments worldwide, while the smaller vendors may provide a slower entry for Intel into the smartphone market.

LG is a major vendor that has shown interest in the Meego OS and could adopt Intel's Medfield chip, Gold said. Intel has virtually no presence in the smartphone market, and can only go up, Gold said.

When the Medfield processor is delivered, Intel will compete with ARM, whose low-power processors go into most of the world's smartphones today. ARM processors are considered more power efficient than Intel's Atom, which have been derived from PC chips.

Reprinted with permission from Story copyright 2014 International Data Group. All rights reserved.
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