Intel, Nokia Partnership Facing Market Challenges

Beyond the technology agreements, the companies will need to hone in on two or three form factors or risk market confusion, analysts suggest.
Analysts see Moorestown as a viable platform for Internet-enabled devices with screen sizes between 4 and 7 inches. Such devices would be larger than RIM's BlackBerry and Apple's iPhone, but could include Nokia's N810 Internet Tablet, which has a 4.1-inch touch screen, but does not offer voice communications.

"It could very well be that they're looking at the mobile tablet part of Nokia's business," Gartner analyst Van Baker told InformationWeek. "Right now, [the N810] doesn't have any voice capabilities, but adding voice would enhance that product significantly."

Voice communications is seen as a key feature in order to compete with smartphones, which are the fastest-growing segment of the mobile-phone market. Without voice, the N810 and other such gadgets become general-purpose computing devices between a smartphone and netbook. Such devices have not been successful with consumers, and that's not expected to change.

"This category has been problematic for some time, and doesn’t look to be turning around," Gartner analyst Ken Dulaney said.

Intel and Nokia could also direct their partnership at "task-specific devices," such as personal navigation and gaming gadgets and electronic-book readers, Dulaney said. "That would be a better area to go after."

Intel's entry into smaller computing devices is expected to present a competitive threat to companies like Texas Instruments and Qualcomm, which offer chips based on the ARM architecture.

Nokia buys ARM chips from Texas Instruments, but said the Intel deal would have no impact on the relationship. "Clearly, they're two different architectures and there's benefits in each of them," Kai Oistamo, executive VP of devices for Nokia, told InformationWeek.

Indeed, ARM chips are expected to hold a power advantage over Intel for some time, making them the better choice in the smallest smartphones and mobile-computing devices, analysts say. Besides Nokia, LG, the third-largest mobile-phone maker in the world, has said it plans to use Intel chips in future mobile-Internet devices.

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