SAN FRANCISCO When Apple Inc unveiled its iPad last month, one crucial detail almost got drowned out in the hoopla: the new tablet computer will be powered by an in-house chip called the A4.
While Apple likely will not market the chip publicly, analysts say the new processor underscores how rival chip designs may eventually win out over Intel Corp's designs in the emergent hot category of mobile devices like smartphones and tablets.
Intel says the first smartphones using its chips go on sale by 2010's second half, as it tries to stake out a corner in the wireless market and replicate what it did for the formerly red-hot netbook category it now almost completely dominates.
But analysts point to an uphill battle against Nvidia Corp, Marvell and Qualcomm Inc, already making headway with cheaper, low-power processors based on designs by ARM Holdings PLC.
"They (Intel) don't have a track record in delivering these types of chips," said Wedbush Morgan analyst Patrick Wang. "They haven't been successful in the past, and they're trying to get in."
Not much is known of the A4 -- the brainchild of Apple design teams including recently acquired PA Semi -- except that it gives the iPad a long battery life and is considered comparable to rival processors in both speed and performance.
That Apple went its own way illustrates how specialized chip design may be more suitable for the burgeoning mobile market than Intel's do-everything approach.
The difficulty, analysts say, is Intel keeps trying to leverage its x86 technology, on which the more powerful processors that drive eight out of 10 personal computers worldwide is based.
"If you look at the stuff Intel's put out there at previous press events and developer forums, you see mobile Internet devices that are kind of clunky, really thick, low-battery life type of devices," Wang said. "They've been worried."
Intel-based tablet laptops have been sold without huge success for nearly a decade. Apple uses Intel chips in its Macintosh personal computers and servers.
A NEW FRONTIER
Since 2007, Intel has been making a strong push into mobile devices with processors designed specifically for wireless products like netbook PCs and handheld Internet gadgets. Its Atom mobile chip began selling in 2008, and has taken the low-cost, no-frills netbook market by storm, powering tiny computers just enough to run Microsoft Corp's Windows system to check email, surf the Web, and create documents.
But with analysts predicting slowing netbook sales growth, Intel wants to convince device makers that its chips are the best bet for the new breed of handheld gadgets.
And there is a reason: at an investor meeting in May, Intel Chief Executive Paul Otellini said the smartphone chip market and the low-cost netbook chip market each will amount to $10 billion in 2011.
To date, Intel has sold just shy of 55 million chips for netbooks and other mobile devices. About 3 million were targeted at handheld Internet products, although Mercury Research analyst Dean McCarron said many of them most likely ended up in low-end netbooks instead.
Now Apple's iPad is expected to cement consumer demand for a new class of tablet-style computers and e-readers. IDC analyst Bob O'Donnell said his firm predicted Apple will sell 3 million to 4 million iPads this year compared to an estimated 35 million netbooks and 165 million notebooks expected to be sold in 2010.
But sales of mobile Internet gadgets like tablets are expected to leap several-fold over the course of coming years -- an emerging battleground for chipmakers.
Nvidia recently became popular for this new generation of mobile devices with its Tegra platform, which offers graphics married to a processing brain based on designs licensed from ARM. Nvidia expects its mobile-focused platform will pull in at least $200 million in revenue in 2010, and to represent as much as half the company's revenue in a few years. In fiscal 2009 the company had overall revenue of $3.45 billion.
But just as Apple shunned Intel for the iPad, most tablet and smartphone manufacturers have chosen to build products containing ARM-based products.
"For Intel, there's an implication that there's a lot of the computing world you don't need an x86 for," said Auriga analyst Daniel Berenbaum.
Instead of relying on Intel's trademark power, performance, and multi-tasking technologies, he said, most smartphones and mobile devices marketed in the last year have primarily been designed around simple tasks such as watching movies, listening to music, surfing the Web, or flipping through photos -- all without draining too much battery power.
That includes Apple, whose self-designed A4 is rumored to be included in the next iPhone, expected this summer.
"If it's a reminder that Intel is not ready for this kind of prime time, it is a sign that ARM is upscaling," said IDC analyst Shane Rau. "It's a sign that the ARM ecosystem is executing."
(Reporting by Ian Sherr; Editing by Edwin Chan, Phil Berlowitz)