By Jeremy Wagstaff and Clare Jim
Jan 31 Intel Corp, the world's biggest
chipmaker, opened a new front on Thursday in a long and
stuttering campaign to get its processors into mobile phones,
although it appears to still have a long way to go.
It joined PC maker Acer Inc in Bangkok to unveil
the Liquid C1 smartphone, a $330 device running Google Inc's
Android operating system, which will be launched first
in Thailand and then rolled out across Southeast Asia, one of
the fastest-growing markets for mobile phones.
"We've made a conscious effort to go after these
fast-growing markets as our first foray into the business," Mike
Bell, who heads Intel's mobile division said in a telephone
The company's ninth such device in nine months, the Liquid
C1 represents how far Intel has come in convincing bigger name
manufacturers to take a chance with its mobile chips as the
sales of personal computers and laptops plunge.
But analysts say it also shows how far it still has to go to
get a foothold in a market dominated by the likes of Qualcomm
Inc and Nvidia Corp.
"First and foremost they have to prove they can play in this
space at all," said Scott Bicheno, senior analyst at Strategy
Analytics. "There's no obvious technical fault with Intel's
chips. It's just that the incumbents are very well established."
Intel has little choice but to get into mobile. It saw
revenue fall 3 percent in the last quarter on weak sales of PCs,
part of a steady decline in revenue growth since 2009.
It has also watched as devices like Apple Inc's
iPad cannibalise sales of PCs.
So, in the past year, the company has launched phones with
Intel chips in Europe, Africa, Latin America, Russia, India and
Some were effectively designed and built by Intel as what it
calls "calling cards", convincing carriers like Orange to brand
and offer the phones on their own networks in France and the
United Kingdom. Last year, it persuaded Chinese hardware
manufacturers like ZTE Corp and Lenovo
Group Ltd to build their own phones with Intel chips.
Sales have not been stellar.
Intel declined to share data, as did ZTE and Lenovo. But
Melissa Chau, senior research manager at technology research
group IDC, said while Lenovo shipped more than 1 million units
of its best-selling phone in China in the third quarter of last
year, it shipped only about 20,000 of its first Intel phone, the
"That's the scale we're talking here," she said.
The problem for Intel is a historical one. By its own
admission it has been slow to move in a fast-changing landscape
where even a decade ago it was clear that desktop PCs and even
laptops were giving way to smaller, lighter, connected devices
for which lower power consumption was at least as important as
In the past year or so, however, Intel seems to have shifted
focus to mobile applications. It acquired Infineon Technologies'
wireless chip business in 2011 and hired and promoted phone
experts like Bell.
"These guys are phone specialists and they've really turned
us around in terms of of the way we approach the market, the way
we approach design," said Uday Marty, managing director for
Intel in Southeast Asia.
It seems to be working, at least in terms of quality.
UK-based Bicheno says the Motorola RAZR i phone that he has been
using, which has an Intel chip, performs as well as any other
"They've learned a huge amount about the mobile world and
how different it is, through their years of failures," said
Caroline Gabriel, head of research at consultancy Rethink
Wireless. "Intel did not understand the process of getting
devices onto carrier networks in the past, but it does now."
Intel has several aces up its sleeve. For one thing, it has
longstanding relationships with the likes of Acer, Lenovo and
Asustek Computer Inc, all of whom are in a similar
predicament: as PC makers, they all need to grow their mobile
But even then, they have been slow jumping aboard. Industry
sources in Taiwan said that Intel had offered extensive lures to
try its mobile chips. Intel executives acknowledged they had
shouldered some costs but said it did not extend as far as
buying a production line of the PC makers.
Intel, too, has used its experience in optimising its
computers chips for Microsoft Windows software to work closely
with Google on making Android run well on its devices.
"We are not just investing in chips, we're investing heavily
in the software to run around them," said Bell.
But questions remain. First, some analysts point to Intel's
somewhat low-key entrance into the mobile sector, threatening to
typecast the company as a low-end phone chip maker.
This would doom it to playing a high-volume, low-margin game
against low-cost chip makers in Taiwan like Mediatek.
Intel counters that it is targeting the $200-$500 segment
because that's where a lot of the growth is, and that it intends
to eventually offer chips that, like its PC chips, range across
all price points.
Intel executives also say they Will be offering a chip
either later this year or early in 2014 that works on the 4G LTE
networks already deployed in the United States and currently
being rolled out in Europe.
The problem there, says Gabriel of Rethink Wireless, is that
it will then be lagging the likes of Qualcomm and STElectronics.
Another concern is whether Intel can move beyond its usual
partners. Persuading the likes of Acer and Lenovo to push out a
smartphone is one thing, analysts say, but what about
established phone makers like HTC Corp, let alone
dominant players Samsung and Apple? Only then would Intel be
able to get the volumes necessary for decent margins.
In the long run, analysts said, a company with the resources
of Intel had a reasonable chance of building at least some
business in mobile.
"Given Intel's vast resources, I am not one to easily
discount their ability to get into any market that they target,"
said Francis Sideco, senior principal analyst at the IHS
And as Intel's Bell points out, the rapid fall of players
like BlackBerry and Nokia, and the equally rapid rise of Samsung
and Apple, suggest that just because Intel is a bit player now,
it may not always be.
"I was at a different firm building phones a couple of years
ago and the company that was going to dominate Earth was RIM,"
said Bell, who has worked at both Palm and Apple. He was
referring to the Blackberry maker that has seen market share
slip heavily in the past few years.
"We'll see two years from now who's the market leader."