Intel sees record profits, pressure to get into smartphones

January 13, 2011 6:58:32 PM PST
Intel Thursday reported record-setting quarterly profits and income. The Santa Clara-based chip maker is an important indicator of technology spending by companies and consumers, but Intel also has a big challenge ahead -- getting inside smartphones and tablet computers ? areas where it currently lags behind.

Intel just had its best year ever. Its success is tied to the fact it is the biggest maker of computer chips and PC's have been selling at a rate of one million per day. However, experts say Intel must shift into high gear to get into smartphones and tablets, which will outsell PC's in a few years.

"We're still at the very front end of the smartphone-tablet phase, we're selling in single-digit millions, the PC market is in the hundreds of millions in terms of product; about mid-decade I think before we see an anticipated cross-over," tech analyst Rob Enderle said.

The issue for Intel is power consumption. Battery life is a big issue for mobile device users. They do not want to lose calls or the ability to run applications during the course of a day due to depleted batteries. Intel is busy working on a refinement of its Atom processor that will not drain the batteries with constant use as well as a next-generation chip.

The dominant chipmakers for mobile devices, such as QUALCOMM and Nvidia, are ahead of the game on power efficiency.

"It's a challenge for Intel to break into that market when they really haven't broken into handsets yet, so what they're trying to do, and this is where they hope to be with their Medville generation later this year is to have a very competitive chipset not only for handsets but also for the tablet market," tech strategist Jim McGregor said.

Another analyst, Jack Gold, says Intel faces a battle for dominance for tablets as more companies go after Apple's iPad.

And smart chips will be needed for electric cars of the future.

Intel's strength will be its deep pockets and its experience in designing and making chips.

"As you go down the road and you take advantage of our manufacturing process and the design technology we have, we'll be a major player in that area; we've already got some tablets just starting to come out now and you'll see more throughout this year," Intel spokesperson Chuck Mulloy said.

With its record-setting quarterly results, Intel clearly has the resources to forge ahead with smartphones and tablets.