Motorola, Lenovo sign on to first Intel-powered smartphones

Wed Jan 11, 2012 1:02am EST

Paul Otellini, president and CEO of Intel Corporation, holds an Intel smartphone reference design as he gives a keynote address during the 2012 International Consumer Electronics Show (CES) in Las Vegas, Nevada, January 10, 2012. REUTERS/Steve Marcus

Paul Otellini, president and CEO of Intel Corporation, holds an Intel smartphone reference design as he gives a keynote address during the 2012 International Consumer Electronics Show (CES) in Las Vegas, Nevada, January 10, 2012.

Credit: Reuters/Steve Marcus

(Reuters) - Intel announced multi-year pacts with Motorola Mobility and Lenovo to develop smartphones and tablets, and said the first Google Android phones using the top chipmaker's processors would go on sale this year.

Speaking at the Consumer Electronics Show in Las Vegas on Tuesday, Intel Chief Executive Paul Otellini said Lenovo would launch a smartphone for the Chinese market using Intel's newest chip in the second quarter of the year, while Motorola will release its phone in the second half.

The agreements with the U.S. and Chinese consumer electronics makers help shore up Intel's boldest foray into the mobile arena. The company is hoping its new "Medfield" chip conserves enough power to compete with rival smartphones using ARM Holdings' more energy-efficient architecture.

The world's largest chip maker is also making a concerted push for the likes of Hewlett Packard to go big on super-slim, Apple Macbook Air-like laptops called Ultrabooks, which it hopes will preserve its dominance of the PC market as tablets like the iPad draw consumers away.

"It is a multi-year, multi-product strategy that will bring both phones and tablets to the (U.S.) marketplace starting with a phone in the second half of 2012," Dave Whalen, a vice president in the Intel Architecture Group, said of the agreement with Motorola.

"You're going to see us working very closely with them on technologies," Whalen told Reuters in an interview.

With mobile processors made by the likes of Texas Instruments Inc and Samsung stealing the show, Intel's engineers have been laboring to adapt technology refined over decades for PCs to work better in handheld devices without quickly draining their batteries.

With its chips so far seen as to power hungry for handheld devices, Intel has found itself left behind in a headlong race to design the brains of tablets and smartphones.

DANGERS OF IRRELEVANCE

Intel says Medfield ranks well in benchmark tests against competing chips on the market.

An ongoing relationship to build smartphones with Motorola could position Intel well in the fast-growing market, even if Motorola continues to make phones using other companies' processors.

Motorola Mobility has agreed to be bought by Google, which owns the Android platform widely used on smartphones and tablets competing with Apple.

"We're going to work very closely with Motorola and Google and really figure out what kind of things we can do that are unique and different," Whalen said, mentioning camera and video technology as examples.

The Lenovo agreement builds on an existing partnership between the two companies focused on personal computers. Lenovo, the world's No. 2 PC maker, has focused its strategy on its home market but on Tuesday, it said it would sell a smartphone for U.S. consumers in time.

Many on Wall Street deem Intel at a crossroads, where it either has to carve out a share of the mobile market or risk becoming irrelevant in the long run.

The Santa Clara, California company has made previous attempts at processors for smartphones and tablets that fell short of expectations and were passed over by manufacturers.

Many Wall Street investors have since taken a "wait and see" attitude toward Intel's efforts in mobile. With the tablet and smartphone market booming -- partly at the expense of personal computers -- investors worry that the chipmaker's setback in mobile could leave it badly positioned for future waves of mobile devices.

Worldwide smartphone processor sales came to $2.24 billion in the third quarter of last year, according to market research firm Strategy Analytics. That's a pittance compared with Intel's $14.7 billion in revenue in the same quarter.

But smartphone sales are expected to grow 32 percent in 2012, according to IHS iSuppli, while some experts see marginal PC microprocessor demand growth at best.

(Editing By Edwin Chan)