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What Intel, Nokia gain in mobile reboot

Chip giant and mobile handset maker have more than a few holes in their respective collections of mobile technologies. How far will this go to plug the holes and take them to the next technology plane?

Intel and Nokia have more than a few holes in their respective collections of mobile technologies. How far will the collaboration announced Tuesday go to plug the holes and take them to the next technology plane?

Intel Senior Vice President Anand Chandrasekher
Intel senior vice president Anand Chandrasekher Intel

A platitude easily missed in the announcement may be the most revealing statement. Simply, that the two companies create the opportunity to take advantage of each other's expertise.

Nokia makes mobile phones. Intel, the world's largest chipmaker, can't get its chips into mobile phones. On the other hand, Intel makes the silicon that powers the world's PCs. Nokia doesn't have a clue about PCs.

The announcement won't necessarily inspire confidence with its lack of product particulars, but that's not what it's about. "Today is a relationship announcement," said Jeff Orr, senior analyst for mobile devices at ABI Research.

Intel and Nokia are simply agreeing at this stage to collaborate rather than be direct competitors, according to Orr.

Nokia was clear--in a cryptic sort of way--on one point, however: "Today's collaboration is not about smartphones but creating a new class of devices," Kai Oistamo, executive vice president for devices at Nokia, said in a phone interview Tuesday.

Beyond those future devices--presumably powered by Intel silicon--what does Intel get? Initially, the most concrete thing is 3G. "This is a gap for Intel, which has focused on Bluetooth, Wi-Fi, and WiMax," Orr said. "As a result, when future architectures like an Atom platform are developed for MIDs (mobile Internet devices), Netbooks, smartphones, that means vendors will have more flexibility for connectivity."

In short, Intel can build 3G into its chipsets and Intel can compete more effectively in the future with products like the iPhone and Palm Pre that include 3G as standard. Intel-based notebooks and Netbooks, until recently, were rarely offered with 3G as a standard option.

"We're not talking about specific products today but certainly we would not have taken a license (from Nokia) if we didn't have the intention to build a product," Anand Chandrasekher, Intel senior vice president and general manager at the Ultra Mobility Group, said in a phone interview Tuesday, referring to Intel's licensing of Nokia's HSPA/3G modem technology.

And it may be too soon for 4G technologies like WiMax. There are many countries (ABI Research's Orr counts about 100) where 3G is just emerging, so talking about WiMax (a 4G technology) is "very premature for most countries," he said.

Though neither company discussed 4G cellular technologies, Long Term Evolution, or LTE, is expected to gain significant market share in the next three to five years. LTE should complement, not replace, Intel's WiMax offerings, according to an analysis provided by Jack Gold of J.Gold Associates, a technology analysis firm. Nokia has significant IP (intellectual property) in 4G as well, so an extension of this relationship in the next couple of years to cover 4G is likely, Gold said.

Nokia also adds to Intel's growing war chest of companies and technologies that will enable it to break into the smartphone and ultra-small device market, Orr said. This year alone Intel has announced collaborations with LG Electronics, Taiwan Semiconductor Manufacturing Company (TSMC), and Wind River. All of these agreements have a major component that addresses Intel's need to compete in the ultra-mobile space.

"They really haven't figured out how to attack the smartphone space with what they have today," said Orr. "So, striking a partnership with somebody like Nokia--to rethink the category of what fits in between a notebook and a smartphone is important," he said.

Intel also wants to stop being typecast as supplier of processors for Netbooks. "They have been wedged into the Netbook category" and not been able to play in the smartphone and small device market, Orr said.

What does Nokia get? It licenses 3G to Intel. "Very important for Nokia because it's licensing its intellectual property," Orr said. "There is a potential revenue stream associated with this IP in future chipsets."

More importantly it gains access to PC technology. "Nokia has certainly understood the smartphone and handset market and made a lot noise on the software side through Symbian and other Linux mobile type initiatives. Now they're trying to figure out how to get more into the computing space," Orr said. Nokia has had little success with its mobile Internet devices to date, according to Orr.

Moreover, Nokia gets the opportunity to diversify beyond ARM, the chip architecture currently used in Apple's iPhone and the Palm Pre, among many other small mobile devices. "Today, we are using only ARM-based processors in our products," said Nokia's Oistamo. Though he would not confirm that Nokia would use Intel's x86 chips in future products, he did say the collaboration is "about the mobile world and the computing world coming together."

Though ARM provides a very power-efficient chip architecture, it cannot match the performance of Intel processors. "By working with Intel, Nokia gets to influence the design of Atom chips specifically targeted where Nokia needs to go," according to Gold's analysis. "And Nokia's collaboration with Intel will influence these chips to include more wireless friendly capabilities."

And both companies hope to see mutual gains in software. Intel and Nokia will collaborate on making their respective open source implementations of Linux for small devices--Moblin and Maemo--more compatible, according to the announcement.