Intel Smartphones Will Not Appear Until 2012

Intel found itself answering “no” to some important questions at the company’s annual shareholder conference here on its Silicon Valley campus.

One of the investors asked whether the world’s largest processor maker would be coming out in 2011 – as it had said last year and earlier this year – with new chips suited for smartphone use, a huge market the company has tried to sell into for years.

“I’m going to disappoint some of you; we’re not going to have a big announcement on smartphones for smartphone customers today,” Intel CEO Paul Otellini told a packed house of investors, partners, analysts and media types.

Nokia Knock Back

“You all know about the disappointment we had with Nokia [in the ill-fated MeeGo smartphone partnership] in the February time frame, when they decided to go a different route. We didn’t sit down and mope after that. We took [back] the product that we had been working on with Nokia very deeply for several years almost exclusively – to the extent we didn’t work with a lot of other customers. We have freed up those resources and turned that design into a form factor/reference design. We’re shopping that now to a number of manufacturers… and we’ve had good success.

“You’ll see the first Intel-based phones [using new Medfield chips] in the market the first part of next year. In hindsight, Nokia was the wrong partner to have picked.”

In February 2011, Finland-based Nokia – which has struggled to compete with Apple’s iPhone and myriad other Android mobile phones – decided to cast its lot with Microsoft to build the Windows Phone 7, abandoning its years-long development partnership with Intel to build a phone operating system called MeeGo.

Smartphones Proving Problematic

For years, Intel has been unsuccessful breaking into the smartphone chip space because device makers have favoured cheaper, lower-power ARM (Advanced RISC Machine)-based chips, such as Qualcomm’s Snapdragon and others made by IBM, Samsung, Globalfoundries and ARM itself.

That led to another question to Otellini at the shareholder meeting – a rather obvious one: “Is Intel planning to build an ARM chip?”

“The short answer is no,” Otellini said. “We did that, we have an ARM licence; we have an ARM architecture licence, for that matter. The important thing for us is how to get paid. We think the best thing for us to get paid in these new markets is to build best-of-class chips. It’s not really the architectural core that makes the difference here; it’s the stuff you put around it, like the other power management and other features.

“The IA [Intel Advantage] versus ARMs is that there is no power penalty that we pay. There’s no advantage to be beholden to someone else, to pay royalties to them, which lowers our overall profits. We can do a better job if we filled out this continuum with IA. We have no intention to use our licence again to build an ARM.”

ARM 32-bit processors are low-cost chips used in more than 90 percent of mobile phones and myriad other handheld digital devices. Because the architecture is relatively simple, they work well in low-power applications.

In 2009, ARM processors accounted for about 90 percent of all embedded 32-bit RISC processors. They are used in mobile phones, media players, handheld game consoles, calculators and peripherals, such as hard drives and routers. Current ARM licencees include Alcatel-Lucent, Apple, Intel, LG, Marvell Technology Group, Microsoft, NEC, Nvidia, Qualcomm, Samsung, Sharp and Texas Instruments, among many others.

As for Intel’s contributions to the burgeoning tablet PC market, Otellini said that “there’s been so much written about tablets that I don’t know where to start, except to say we’re on track. We’re tracking 35 designs on multiple operating systems. Some are shipping now with Windows. We’re demonstrating some Android devices now.

“The tablet race is nowhere near finished. No one really knows the size of this market, but it’s real clear that everyone’s putting energy into it. It’s not just about tablets; it’s about variants, like convertibles [netbooks and laptops with swivel tops that turn around to become tablets]. There’s going to be a tremendous amount of experimentation here,” Otellini said.

Smart TV boxes are another hot market, Otellini said, especially in Europe, where Intel is shipping 10,000 units a day.

“We are shipping nine versions of Smart TVs now, not all of which are Google TVs,” he said. “The centrepiece for Smart TV adoption now is in Europe – old-line Europe, it’s France and Italy. The Intel set-top box is turning the TV into a very productive [device], bringing you real-time broadcasts and Internet content and marrying it in a seamless fashion.”