Intel courts phone makers: Much anticipated reference design with Microsoft comes at 3GSM World Congress cellular show - Semiconductors

Electronic News, Feb 25, 2002 by Tom Murphy

After gaining a significant foothold in the PDA market, Intel Corp. made its strongest overture yet to cell phone makers. Last week the company announced its joint venture with Microsoft Corp. to develop a reference design for smart phones using its Xscale processor.

Intel and Microsoft made their announcements at the 3GSM World Congress in Cannes, France, which is a trade show dominated mostly by cell phone manufacturers Nokia and Ericsson. These two cell phone giants use a standard processor platform based on a Texas Instruments Inc. chip, but Intel signaled its presence in the market by indicating it wants dominate the wireless portable device market the same way it has dominated the PC market with Microsoft.

Some in the communications world were skeptical of Intel's foray into their market, said Will Strauss, an analyst with Forward Concepts of Tempe, Ariz. Nonetheless, Intel has come up with a high-performance microprocessor in its recently announced XScale products, leaving no doubt that it is a serious contender in the market, Strauss said.

"It is a market where they haven't had much of a presence before," Strauss said. "But there's no doubt they will be a significant player here. It just might not be as easy to get there as [Intel] envisions."

Key to Santa Clara, Calif.-based Intel's strategy is the ability to throw enough monetary support behind the endeavor to keep it going for years, Strauss said.

But the joint effort with Redmond, Wash.'s Microsoft will base a smart phone reference design around an Xscale processor and Microsoft's Windows CE and Windows operating systems. This is a plan similar to that of the Intel x86-Microsoft Windows OS alliance which thoroughly dominates the PC industry.

"The strategy is to access a vast community of developers and enable them to tackle problems and develop applications for these devices," an Intel spokesman said. "We see this as a great collaboration and we talk about ecosystems for developers. Our companies will work together to build the fastest platform and together we will kick start applications development and spur growth in the markets for 2.5 G smart phones and PDAs."

While Intel is the largest semiconductor company in the world, and Microsoft is the largest software company in the world, Intel faces substantial resistance in gaining share in the cell phone arena, which is dominated by the largest DSP player Texas Instruments Inc. of Dallas. While Intel has Xscale, the latest version of the company's StrongARM processor, TI is also developing OMAP; its own reference design platform based primarily on its market-leading DSP cores.