Intel has strong technology for handheld computers in its StrongARM chip, but until recently it has ignored the potential of this fast-developing market. Now it seems to be waking up.
In the past, Intel has been successful at promulgating de facto standards when it focused on hardware and had strong backing from Microsoft, as well as from manufacturers such as Compaq Computer and Dell Computer.
But these traditional allies have little presence in the mobile wireless and handheld marketplace, and none of them are on the list of companies supporting the Personal Internet Client Architecture. The companies on that list are all small players in a market in which the large manufacturers already have developed their own architectures, most of which do not use Intel chip sets. To be successful, Intel needs to win some of the large players in this market to its side.
Furthermore, the market itself is not unified. Handhelds, cell phones, and set-top boxes are entirely different devices, each with different needs. Cell phones, for instance, will not require the processing power of Intel StrongARM. And while Intel may sell some chips into this market, its brand will have no particular strength.
We do not expect Intel to gain much traction in the cell phone market, and although it might do better with handhelds, there is nothing in this announcement from Palm. If Intel were partnering with Microsoft and CE, at least, it might be more interesting.
Much of Intel's cell phone initiative is based on its acquisition about 18 months ago of Dialogic, a voice recognition/interactive voice response (IVR) vendor, and its continuing push into digital signal processor (DSP) chip markets. Intel sees the phone market as a potential market not only for its chips--XScale, DSP and flash memory--but also as a way to get DSP, voice recognition, and text-to-speech into the handset and back-end systems.
This in many ways parallels Microsoft's efforts, because it too wants to drive the phone into higher-performance/processing capability, through use of fully capable microbrowsers--Microsoft Mobile Explorer (MME)--Windows CE as the OS, and connection to back-end services, primarily Exchange, but ultimately SQL Server-based applications.
The bottom line to winning the cell phone market is to get the big players--Nokia, Motorola, Ericsson, Samsung-on board. These manufacturers are not currently using Intel chips, and winning them over will be very difficult. Samsung may be the exception, because it has quickly jumped on the Microsoft bandwagon, deploying MME on its high-end feature phones and seriously contemplating Windows CE to replace Symbian. If this happens, it may bode well for Intel.
To some extent, this initiative appears to be an Intel attempt to gain presence in networking, a market that it has been trying to crack--with little success--for years. However, it has even less presence in wireless than in wired networking, and this announcement by itself is a very small step toward that market.
We expect Intel to market its StrongARM chip technology, renamed XScale with this announcement, more aggressively in all the wireless, mobile, battery-operated areas that require low power. The technology itself is impressive, and we believe that, if anything, Intel should have started paying more attention to it earlier.
By itself, however, this announcement is not a major step forward. Users should not expect to see "Intel Inside" labels on cell phones or handhelds soon, and even when they do, they should not base their buying plans for these devices on that label. It does not necessarily promise any advantages over competing technologies already established in this market.
META Group analysts Dale Kutnick, Val Sribar, David Cearley, Peter Burris, Jack Gold, and William Zachmann contributed to this article.
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