Intel and Nokia Team Up To Create Mobile Device: June, 2009

As cellphones become ever more like computers, two giants in communications and computing have come together to hasten the process.

Intel Corp., the world’s largest maker of computer chips, and Nokia Corp., which has a 40% share of the handset market, say they will work together to create a new mobile computing platform.

The companies did not release many specifics about the deal, other than to say they hope to develop products “to define a new mobile platform beyond today’s smart phones, notebooks and netbooks.”

“Cellphones need powerful computers inside,” Anand Chandrasekher, senior vice president and general manager of Intel’s ultra mobility group, said Tuesday. “It’s natural, therefore, that the leaders in computing and communications come together.”

The move was hailed as a major step for Intel, which has struggled to cash in on the fast-growing demand for cellphones. “Everybody who sells chips is keen to get into the handset market,” said Joseph Byrne, senior analyst with the Linley Group, a semiconductor research and analysis consultant in Mountain View. “More than a billion units ship every year, much more than PCs.”

Although Intel and Nokia did not discuss specific products, analysts presume they have their sights on creating a gadget, as opposed to retooling phones now on the market.

“Whatever product we see come out of this partnership is probably not something we can see for one to two years,” said Kevin Burden, practice director for mobile devices at ABI Research, an analyst firm in New York. “These are two companies with tremendous scale, tremendous research and development budgets, and they have the potential of building something new, something revolutionary down the road. We don’t know what that is.”

Burden predicts that a new category of machine, known as smart books or mobile Internet devices, may yet evolve. Nokia already tried its hand with its N810 Internet tablet, a 5-inch device announced in 2007, offering a small keyboard and constant cellular connectivity. Instead, Burden said, inexpensive laptops known as netbooks took off, and Nokia went back to the drawing board.

Similarly, Intel had stalled in earlier efforts aimed at expanding from personal computers into the fast-growing field of mobile devices. It sold its unit that made mobile chips for $600 million in 2006.

The time was not right earlier, executives for the two companies said in a conference call Tuesday. “This is the time,” said Kai Oistamo, Nokia executive vice president for devices. “The mobile and computing industries are coming together.”

The Intel-Nokia alliance would compete with chip makers Broadcom Corp. of Irvine and Qualcomm Inc. of San Diego, which are setting their sights on selling chips for similar devices, Burden said.

Shares of Intel closed Tuesday at $15.81, up 13 cents, or less than 1%. Nokia shares were up 38 cents, or 2.7%, to $14.46.

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