Like an Old Testament prophet emerging from the wilderness, David Perlmutter came out of the Intel Research Center at Haifa, Israel, last summer to save the chipmaker's, um, bacon. One of the design brains behind both the Pentium and Centrino lines of microprocessors, Perlmutter--a gruff Israeli known as "Dadi"--introduced the Core 2 Duo chips last July. Not only did the processor line launch a turnaround for Intel, winning back market share from Advanced Micro Devices and adding nearly 28% to the company's share price in less than 12 months, it represented something of a crossover dribble for Intel: Instead of cramming more and more transistors onto ever more powerful chips and thus increasing power consumption and heat output in an engineering vicious circle, Perlmutter introduced a new design paradigm, making the fastest and most powerful chips possible within a tight range of energy requirements and temperatures.

Intel isn't ignoring the risk of betting on an in-betweener product category, says Intel senior VP David Perlmutter Photo by Jeffery Newbury

Now Perlmutter is in charge of Intel's mobility group and, along with his lieutenant, Shmuel "Mooly" Eden, he's being asked to reorient Intel again. Envisioning a computing environment populated with devices known variously as ultramobile PCs (UMPCs), mobile Internet devices (MIDs), and even "smartphones on steroids," Intel is introducing a chip architecture to enable Internet-focused, multimedia-enhanced, handheld gadgets powered by light, cool, energy-stingy chips.

It's Intel's biggest repositioning since its drive into notebook-specific processors in 2000, which led to the Centrino chip. It's a shift that's been in the making for more than two years, when Intel put a team in place to evolve its architecture to power and cost levels "beyond what we were doing on our mainstream products" for notebooks, desktops, and servers, Perlmutter says. The world's largest chipmaker, he adds, is "rethinking the high end of the smartphone category."

The new ultramobile architecture signifies more than just a strategy shift for Intel. It's a gamble on an emerging category of devices aimed at business users, one that's met with mixed success in the past (remember the EO, from AT&T?). It's a category that conflates the capabilities of wireless laptops and smartphones in more costly, less wieldy devices that--theoretically, at least--will nudge aside the wildly popular BlackBerry and its rivals. What does Intel bring to that table? First, Perlmutter's low-profile, energy-efficient chip design; second, Intel's low-cost commodity manufacturing expertise; and third, a brand name in the computer industry that can drive market acceptance like few can anymore.

Personalization will drive the acceptance of this new kind of device, Intel's Shmuel "Mooly" Eden says

If Perlmutter and Eden are right, they're forging a new era of Internet-everywhere, long-battery-life devices that will capture big corporate accounts and lead Intel's growth into the next decade. If they're wrong, well, the seaside city of Haifa is a lovely place to retire.

SHIFT HAPPENS
The first batch of devices to use the new Intel architecture includes the Shift, a mini-PC with a 7-inch tilting screen and a full slide-out keyboard, unveiled earlier this year by Taiwanese handset maker HTC. At Intel's Developer Forum in Beijing in April, HTC said the Shift will use Intel's Ultra Mobile Platform 2007. Originally code-named McCaslin, the Ultra Mobile Platform 2007 features A100 and A110 processors along with the 945GU Express chipset for notebook-like graphics capabilities and the ICH7U I/O Controller Hub. UMP 2007 will give HTC's Shift, to go on sale in Europe and the United States in the third quarter, as well as forthcoming UMP-based devices from Aigo, Fujitsu, and Samsung, 40% more battery life compared with Intel's notebook chipsets, the company says.

For years, we've been hearing how smartphones eventually will replace computers for mobile professionals, yet only 1% to 2% of corporate E-mail accounts worldwide are available on mobile devices. Still, the smartphone market is roaring ahead: Gartner says shipments will hit 100 million this year, up from around 73 million units in 2006, and they could increase by another 50% to 60% in 2008. And corporate acceptance is growing: Business smartphones, which represented 17% of the market last year, will account for 19% this year and 24% next year, Gartner says.

	Fish or foul? Palm's Foleo met with skepticism.

As for the hotly anticipated iPhone, in debuting the sleek handset in January, Steve Jobs said Apple's goal for the first year is 1% of the worldwide mobile phone market, or 10 million units. Some analysts say that's low: Bernstein Research predicts Apple will sell 7 million iPhones in the last six months of this year alone, and another 15 million next year. How many of those will be for business use is anyone's guess, although Jobs' announcement last week that the iPhone will be open only to Web-based applications from third-party developers is likely to slow business uptake.

It's worth noting that Intel has stumbled before in trying to move into the handheld realm. CEO Paul Otellini sold off the ill-conceived XScape cell phone processor division, arguably the biggest failure in the company's history, in June of last year.

For a measure of the challenge Intel faces--along with HTC, Samsung, and the handset makers rushing to market with ultramobile devices--take a look at Jeff Hawkins, the founder of Palm Computing. Onstage at the D: All Things Digital conference last month, looking as endearingly gawky as ever, Hawkins tried to sell a skeptical crowd on the merits of the Foleo, the new Treo companion with which Palm Inc. hopes to revive its flagging prospects. Hawkins handled the Foleo, essentially a slimmed-down notebook, less like an MID than an IED, as if it might blow up in his fingers at any moment. And judging from the critics' reaction to the new device, the Foleo already has exploded in Palm's face.