Intel Readies Push into Mobile Internet Devices

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Mobile Computing's Category Lines Blur

Meantime, handhelds are taking on many of the functions of full-fledged computers. Market researcher Gartner (IT) forecasts the worldwide smartphone market will grow 32% in 2009, to 190.8 million units. "The line between what's a smartphone, what's a mobile Internet device, what's an ultra mobile PC—it's all going to disappear," Dell (DELL) CEO Michael Dell said in an interview last year. Another sign of the changing times: Intel Chairman Craig Barrett, who presided as CEO over the PC boom of the late '90s, said on Jan. 23 he plans to retire in May.

Yet Intel's history in the mobile computing market has been checkered. The company sold its XScale mobile chip business to Marvell Technology (MRVL) in 2006, and some analysts are skeptical its latest run at handhelds will go better. "What Intel is trying to do with this mobile Internet device category is essentially tell people, 'The smartphone is too limited for a lot of applications…so you need this thing in between,'" says analyst Haff. "I've certainly yet to be convinced there's a market for something in between a smartphone and a netbook."

To help with the convincing, Intel is stocking up on staff skilled in the operating system that will run the devices. One of the world's most experienced Linux programmers, Alan Cox, will join Intel from Red Hat (RHT) in March and work on projects including Moblin. "They were more than happy to have him there," says Paul Cormier, an executive vice-president at Red Hat. At the beginning of January, Intel brought on board Peter Anvin, another key Linux developer.

Intel is also paying special attention to MIDs' software to try to ensure users find the devices compelling. The devices will feature new capabilities like touchscreens that recognize users' gestures and a graphical user interface that employs 3D and translucent icons. Moblin 2 will be free to hardware makers and distributed by companies including Canonical and Novell (NOVL). "What we've done in the PC space, we're driving into these smaller[-size] devices," says Doug Fisher, vice-president for Intel's software and services group. "We're doing some aggressive stuff to make sure Linux takes advantage" of MIDs, he says.

Modifying the Atom Netbook Processor

On the hardware side, Intel is adapting its Atom processor, used today mainly in low-priced portable netbook computers, for MIDs. Atom sales have been a bright spot in Intel's otherwise gloomy business; fourth-quarter sales of the chips rose 50% from the previous quarter, to $300 million. A lower-power version of Atom called Moorestown, scheduled to arrive in 2009 or 2010, will target MIDs, which need to run longer and cooler than netbooks do, and future Atom chips could target smartphones as well.

Developing free software for mobile Internet devices also gives Intel an alternative to Microsoft's Windows Mobile operating system, whose market share has been shrinking. Microsoft counters by saying it doubts the market potential for handhelds with relatively large screens that could be unwieldy to carry around. "I'm not sure there's a third category of device" between a cell phone and a netbook, says Andy Lees, a senior vice-president in Microsoft's mobile communications business. "The thing that distinguishes a phone is it goes in your pocket or purse. If you have a six-inch screen, that's no-man's land."

The fight over who'll supply the chips and software for new generations of mobile computers is straining some of the tech industry's most durable alliances. "Intel is very aggressive about developing a software platform that they can deliver on MIDs, and eventually cell phones, and deliver it with their [chips] for free," says analyst Enderle. "Apple and Microsoft are…collateral damage."

Ricadela is a writer for BusinessWeek in Silicon Valley.