Intel's Finnish Fetish

Intel's Finnish Fetish

By Dave Mock
June 13, 2005

Chipmaker Intel (NASDAQ: INTC) has successfully topped the personal computer market for decades. Breaking into related areas such as communications has been much difficult for the world's largest semiconductor maker. But a new partnership with Nokia (NYSE: NOK) could help to change that.

Intel's forays into cellular-phone and home-entertaiment-device chips have fallen far short of the company's ambitions. Even strategic acquisitions intended to give them a boost into certain markets have largely soured.

One reason for Intel's recent track record may simply be poor timing -- Intel was snapping up many companies while the market was falling after 2000. After many shuttered divisions and thousands of pink slips, Intel reorganized its communication efforts, a shuffle that culminated with the news that Paul Otellini would become CEO late last year.

More recent moves into mobile broadband communications have fared much better for Intel, though. Integrating new wireless communication functions into PC chipsets is starting to pay off for the chip giant. As more and more laptops adopt its Centrino chipsets, which add Wi-Fi connectivity to mobile PCs, Intel is pushing ahead with the next generation of broadband communications -- a technology called WiMax.

Last month, Intel inked a deal with Sprint (NYSE: FON) to test WiMax technology, chips and devices in a mobile network, adding a top-tier wireless carrier to the team. The current WiMax chipset from Intel only supports communications between fixed points, but many players are hot on the much-hyped mobile version of WiMax, which is still going through the standards process.

Intel has since successfully courted Nokia for its team. The Finnish mobile device manufacturer agreed last week to collaborate with Intel on mobile WiMax, committing resources to the development and testing of infrastructure and mobile terminals. Intel's partnership with top companies like Nokia and Sprint nearly guarantees a significant market presence for WiMax when it eventually arrives.

But many performance and functional questions about WiMax remain unanswered. Its performance relative to current wireless broadband solutions, such as high-speed 3G networks from Verizon (NYSE: VZ), is still unknown. I believe that while mobile WiMax is farther out than Intel would like to acknowledge, it will be a major factor in the mobile computing market by the end of the decade.