Intel, Nokia both should win in partnership

Even without concrete products, both companies could benefit

The partnership Intel and Nokia announced on Tuesday to develop future mobile devices should help both companies, though analysts are skeptical whether it will result in any actual products.

The companies announced they were teaming up to develop new mobile computing devices and chipset architectures. They will also collaborate on several open-source mobile Linux projects.

The joint effort could lead to the development of "pocketable" devices that reach a new audience beyond netbook and mobile Internet device (MID) users, the companies said. The companies said they wanted to merge the computing and mobile worlds in pocketable devices but otherwise were vague on product details.

Several industry analysts were disappointed at the lack of product details in the announcement and speculated that the device could be a smartphone, an MID, a netbook, or an e-book reader. It's too early to predict, as designs of mobile devices consistently change, they said.

One analyst doubts the alliance will result in a winning product. The companies have worked together for close to a decade on multiple technologies that included mobile devices and mobile broadband technologies such as WiMAX, but nothing spectacular has come of it, said Jim McGregor, chief technology strategist with In-Stat. The partnership is "vaporware" until they detail the products surrounding it, he said.

Intel is already covering a range of mobile devices -- including netbooks, MIDs and smartphones -- with its current and future chips, and it's hard to envision a radically different mobile device, McGregor said. However, the partnership could be a sign that Nokia is looking to move beyond handsets into netbooks, a product category that is popular and gaining momentum, McGregor said.

Even if no specific products come out of it, the collaboration could be mutually beneficial as both companies try to expand their presence in key markets, analysts said. Intel, the world's top chip maker, is trying to catch up with competitor Arm in the mobile-phone space. Nokia, the world's biggest mobile-phone vendor, is looking to expand its product offerings beyond handsets, analysts said.

Intel has a road map of chips that could go into many devices, and the alliance gives Nokia a broader capability to build Internet-centric devices, said Leslie Fiering, a vice president covering mobile computing at Gartner. Nokia has been strong in the handset space and could be looking at mobile devices in different form factors, which could include netbooks, Fiering said.

One trigger for Nokia's alignment with Intel may have been Apple's popular iPhone device, an Internet-centric smartphone that has a strong software and entertainment ecosystem around it, Fiering said. For example, iPhone users can download movies and videos from the iTunes store, and software applications from Apple's App Store. Using Intel's chips could bring a larger ecosystem and stronger set of x86-based applications to Nokia's mobile devices, Fiering said.

Intel, on the other hand, could use Nokia's market presence to get an entry into the mobile space, which is the next obvious market for the chip company as it tries to expand beyond the PC business, said Dan Olds, principal analyst with Gabriel Consulting Group. After years of trying, Intel has realized that it can't sell chips for mobile devices itself, and Nokia gives Intel a beachhead to get into that industry.

Intel's revenue opportunities from the alliance will be insignificant for a while, Olds said. However, the company will get an inside view on how to market its mobile chips through Nokia's eyes, which could help it build revenue over time.

Intel has a history of trying to enter key markets itself, and this alliance shows Intel's willingness to adopt partners. Intel realized it needed help to sell its mobile chips based on the Atom architecture to tackle processors designed by rival Arm, Olds said. Arm chips go into most of the world's mobile phones, including the iPhone 3G S and Palm's Pre.

Nokia, which currently depends on Arm chips for most of its smartphones and its Internet tablets, understands that the Arm architecture could fall short as it tries to move upstream and serve the netbook and MID markets, said Jack Gold, principal analyst at J.Gold Associates, in a research report. Most of the netbooks today carry Intel's Atom chips.

"By working with Intel, Nokia gets to influence the design of Atom chips specifically targeted where Nokia needs to go; expanding from its smartphones base and into more wireless entertainment devices," Gold wrote.

Two of the world's top three mobile-phone makers now plan to use Intel's chips in mobile devices. LG Electronics said earlier this year it would use Intel chips in an upcoming MID. These two design wins should put Intel in a better position to compete with companies such as Texas Instruments and Qualcomm, which make Arm-based chips for mobile devices.

During the announcement, Intel also said it would license Nokia's technology for 3G HSPA (High Speed Packet Access) cellular technology for use with its chips. Nokia has compelling intellectual property in 3G radio technology, and the adoption of Nokia's mobile broadband technology could help to strengthen Intel's communications offerings, which include Wi-Fi and WiMax chips, analysts said.

"This is critical in the netbook and MID space, where it has targeted its Atom processors, and where it hopes to eventually make a play for smartphones as well with future, lower-powered models of Atom," Gold wrote. Initial products using the new capability could be in Atom-based systems that could be released in early to mid-2010, he said.

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