June 1, 2008 5:44 pm

Intel to re-enter mobile phone market

Intel is poised to re-enter the mobile phone market as operators earn a greater portion of their revenues from data and internet access, said Paul Otellini, the company’s chief executive.

Mr Otellini believes Intel’s expertise in PC processors, in which it has an 80 per cent market share, can help it make inroads into mobile phones as smarter models become more like computers.

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“If you accept that the value proposition of the high end of the mobile phone market is full internet access that happens to have voice, my view is that it’s easier to add voice to a small computer than vice-versa,” he said in an FT interview.

Its drive will be spearheaded by its new low-power Atom microprocessor. A second-generation version of the chip, expected in late 2009, will be aimed at smart phones.

Intel failed in its last attempt to penetrate the mobile phone market, selling its XScale communications division to Silicon Valley neighbour Marvell in 2006.

“We are bringing an element of computing into large markets, many of which are larger than the PC business, certainly in terms of units,” he said, “So [Atom] is our architecture for things small or embedded.”

The Atom family of processors will enable the chip maker to address four new markets over the next few years, each potentially worth $10bn, Mr Otellini said.

The world’s biggest chipmaker unveiled Atom at its developer forum in Shanghai in April. It said at the time that it expected PC manufacturers to launch a new category of portable computers known as mobile internet devices (Mids) – iPhone-like mini tablet PCs designed for mobile internet access – built around the chips.

Mr Otellini, in New York last week to address investors at a Lehman technology conference, expressed confidence that the market for mobile internet devices would grow into a $10bn-a-year market within a few years.

In addition, he said Intel expects the new processors to begin appearing in traditional consumer electronics devices including televisions, ultra low-cost PCs sometimes called ‘netbooks or net-tops’, and as embedded processors in a wide range of other products.

“Each of these four markets is a $10bn opportunity by 2010 or 2011,” Mr Otellini said.

Intel is expected to unveil more than two dozen netbooks using Atom at the Computex show in Taiwan this week.

In order to connect these gadgets to the internet, Intel is backing a 4G broadband wireless standard called WiMax which is being deployed in the US by a consortium led by Sprint and Clearwire and also includes Intel, Google and three leading cable TV network operators.

Mr Otellini expressed confidence that the $14.5bn Clearwire joint venture is on track to launch services across the US this year and next, and that WiMax will retain its time-to-market advantage over rival 4G technologies including LTE (Long Term Evolution) that incumbent mobile phone network operators including Verizon Wireless, Vodafone and AT&T plan to begin deploying in 2010.

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