Wednesday, June 24, 2009

Nokia, Intel Partnership Facing Market Challenges

n announcing a mobile computing partnership with Intel (NSDQ: INTC), Nokia (NYSE: NOK) has gotten a big boost into a market the chipmaker has been unable to penetrate. But it remains to be seen whether the collaboration will lead to Internet-enabled devices that are as popular with consumers as today's smartphones.

The companies announced their "technology collaboration" Tuesday, saying it would lead to a new class of mobile-computing devices. However, if the companies knew how these devices would be different than what's available on store shelves currently, they were not saying.

"We will talk about product when we are ready to talk about product," Anand Chandrasekher, senior VP and general manager of Intel's Ultra Mobility Group, told reporters during a joint teleconference with Nokia.

What the companies were willing to talk about pointed to a big win for Intel. Besides increasing market access through a deal with the world's largest mobile-phone maker, Intel also got a license for Nokia's HSPA/3G radio technology.

Such technology was missing from Intel's chipsets, which currently support Wi-Fi and WiMax, a wireless wide area network technology that Intel is hoping will someday be a challenger to carriers' future 4G data networks. However, with no guarantee WiMax will ever be successful, Intel needed technology to get on carriers' existing networks.

The partnership also gave a boost to Intel's Linux-based Moblin operating system for mobile Internet devices. Nokia agreed to work with Intel on developing Moblin, which is tailor-made for Intel's Atom processor, for future gadgets. The two companies also agreed to optimize Nokia's Linux-based OS, Maemo, to run on Intel's microarchitecture.

Beyond the technology agreements, little is known about the product direction Nokia and Intel are headed. Intel chips today are too power hungry for anything smaller than a netbook, which are mini-laptops with screen sizes ranging from 8 to 10 inches.

However, that's expected to change when Intel releases the next-generation Atom-based mobile platform, code-named Moorestown, which Intel claims consumes 10 times less power when devices are in idle mode. Intel is expected to start shipping the platform in 2010.