June 29, 2009

Intel and Nokia Announce Long-Term Relationship

In a deal intended to strengthen Intel's push into the mobile computing arena, the Santa Clara chip maker and Finnish cell phone giant Nokia on Tuesday announced what they called a long-term relationship to develop new mobile devices.

Under the arrangement, the companies said they will work together on chip design and open-source software. Intel recently has entered that field with its Linux-based operating system called Moblin, designed to function on portable devices, and Nokia has a Linux-based operating system, dubbed Maemo. In addition, Intel will license some modem technology from Nokia.

However, executives with the two companies repeatedly declined during a conference call and a later interview to discuss what type of devices they might make and to what extent Nokia might use Intel's chips.

"We will talk about products when we are ready to talk about products, but that is not for today's discussion," said Anand Chandrasekher, senior vice president and general manager of Intel's ultra mobility group.

"There is a lot of room for innovation here, to really define what mobile can do," said Kai Öistämö, Nokia's executive vice president for devices. "It's a future full of different possibilities." After the announcement, Intel's stock rose 13 cents to $15.81 at the close of trading.

No financial terms were disclosed for the deal, and the two executives were evasive about when their collaborative discussions began. They said only that their companies have been doing joint research for several years. In May, Intel, Nokia and a number of other companies formed an association to promote rapid new wireless technology for shuttling data among computers, high-definition television sets and other devices in homes.

Although details about the agreement announced Tuesday remain vague, the deal suggests intriguing possibilities for Intel. Although the company's x86 microprocessors serve as the brains in most personal computers and servers, it sees the rapidly expanding market for mobile computing devices as one of its biggest growth opportunities. And the cell phone business, where Nokia is the world's biggest manufacturer, is an area Intel is especially keen to enter.

Intel, whose chips are not used in Nokia products, has so far been shut out of the cell phone market. That's largely because Intel's microprocessors use too much power to enable the phones to maintain sufficient battery life. Instead, cell phones use low-power chips based on technology developed by ARM, a small company in the United Kingdom.

Öistämö said Nokia plans to continue working with ARM-based chip makers. But Intel hopes to break into the cell phone market with future versions of a chip it introduced in March last year, called Atom, which uses less power than other Intel microprocessors and is relatively inexpensive. Moblin, one of the open-source software systems that Intel and Nokia will collaborate on, works well with the Atom chip, the companies noted in their joint press release.

What sort of devices the two companies might develop remains unclear. Nokia has been rumored this year to be considering making netbooks, which are smaller than laptops. Intel, whose microprocessors already are in laptops and netbooks, is promoting its chips for even tinier gadgets, including phones.

In their press release, the companies said they hoped to "define a new mobile platform beyond today's smart-phones, notebooks and netbooks." The deal drew mixed reviews from analysts.

"This is a compelling partnership," Jack Gold, founder of technology research firm J. Gold Associates, based in Massachusetts, said in a note to his clients. "We do not envision Nokia abandoning its core dependence on the ARM architecture in the short term, but longer term (two to three years) we expect Nokia to offer devices based on Atom." Gold added that "this collaboration could limit the impact Google's Android operating system will have on the netbook market."

But J.P. Morgan analyst Christopher Danely was less enthusiastic about the partnership, writing to his clients that "we don't expect much to come out of it."

While the deal "should help Intel in its quest to generate wireless design wins for its Atom processor," Danely concluded, "we continue to believe the deficiencies of Atom in power consumption, cost and software relative to other applications processors render it an uncompetitive product."

Source: http://www.mercurynews.com/business/ci_12672076?source=email

Tags: Intel, Nokia, Strategic Partnership, Jack Gold, Atom, ARM chips, Google Android, Christopher Danley, JP Morgan, Silicon Valley, Moblin, Santa Clara, Netbooks, Maemo, Global IT News,

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