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TOMORROW'S WORLD
11 Apr 2011
INTEL, ON THE OUTSIDE, TAKES AIM AT SMARTPHONES

With an “Intel Inside” sticker affixed to their PCs, computer buyers in the 1990s could hardly avoid knowing whose microchip was making their machines work. The campaign made Intel one of the most recognizable brands and cemented its position in the PC industry.

As long as PCs were dominant, Intel was dominant. But it’s now a new world in which tiny hand-held computers, more commonly known as smartphones, are outselling personal computers.

And usually, there is no Intel inside.

Instead, the processors in smartphones and tablets these days are more likely to be made by companies that few consumers would recognize, like Qualcomm, Nvidia and Marvell. And those companies are fighting to gain market dominance in much the same way Intel did with chips for personal computers: by making what’s inside the phone matter to consumers.

“It’s become an arms race, like the early days of the PC industry,” said Chris Jones, vice president and principal analyst at Canalys, a market research company. These chip companies are racing to improve the speed and performance of their processors so they can boast of having the fastest application processor on the market. With smartphones and tablets increasingly performing the tasks of full-size computers, they have an additional obsession: making energy-efficient chips that will prolong the battery life of a mobile device.

So far, the obsession with speed and energy efficiency has paid off for everybody but Intel. The PC chip giant has been conspicuously late to the mobile market, having canceled plans to ship a smartphone version of its Atom processor after a demonstration of it running in an LG phone over a year ago.

The difficulty for Intel, say analysts, has been to get its chips’ power consumption down to a level reasonable for a phone. Still, Paul Otellini, Intel’s chief executive, vowed recently that Intel-powered smartphones would be on the market before the year is out. With those phones, Intel hopes to rebuild credibility in a business some customers had thought it would never get right.

But meanwhile, the company has just recently lost its mobile champion, Anand Chandrasekher, the 24-year Intel stalwart who has long headed up the company’s mobile processor development, including the wildly successful Centrino product that made Wi-Fi a household name.

While industry analysts were divided on whether Mr. Chandrasekher had resigned or had been pushed out, they were in agreement on one thing: The company has a lot of catching up to do in the mobile market. “It’s clear that Intel’s mobile business is not going as well has they had hoped,” said Linley Gwennap, an industry analyst and head of the Linley Group in Mountain View, Calif. “But this is not an indication of a change of strategy, just of leadership.”

Intel executives quickly assured the industry that the company remained committed to smartphones, despite the sudden departure of Mr. Chandrasekher.

Competitors say they will be ready for Intel when it arrives. “I always assume they’ll show up,” said Michael Rayfield, general manager of Nvidia’s mobile group. “All I can do is innovate rapidly to stay ahead.”

Intel’s competitors are also hoping that a recent decision by Nokia, the largest phone maker, to use Windows Phone 7 rather than the Symbian operating system, will help them fend off Intel, given that the Microsoft program is currently optimized for ARM-based cellphones. “Nokia used to be a nonopportunity for us,” said Jen-Hsun Huang, chief executive of Nvidia. “Our market opportunity just got 33 percent bigger.”

Qualcomm has the same idea. Anything that expands the “Microsoft phone ecosystem,” said Steven M. Mollenkopf, executive vice president and group president at Qualcomm, based in San Diego, is a “positive thing for Qualcomm.”

In contrast to the PC market, in which Intel and Advanced Micro Devices slugged it out through the 1980s and 1990s, the list of companies supplying chips for smartphones is long. Qualcomm, Texas Instruments and Samsung lead the market with a combined market share of 87 percent — with the biggest share of that belonging to Qualcomm. Nvidia, Broadcom, Samsung, Marvell and others are vying for the remainder, according to the market researcher Strategy Analytics.

Source: nytimes.com

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