Intel hints tie-up with Orange

Eric Auchard and Lucas van Grinsven

CANNES, FRANCE: Intel will reveal designs for future mobile phones and key deals with big network operators and manufacturers in Europe and Taiwan, as it aims to shake up the mobile industry with computer economics.

In a speech at the wireless communications industry's biggest trade show in Cannes, France, Intel Corp. Chief Operating Officer, Paul Otellini plans to spell out the No. 1 chip maker's plans to drive its ever lower-cost semiconductors into wireless markets.

"To think that phones are not subject to the laws of silicon is naive. They are just small computers," Otellini told Reuters in an interview ahead of his speech at the 3GSM World Congress.

His sweeping declaration of Intel's intentions to remake the mobile phone industry in its own image must overcome resistance from a fragmented global industry accustomed to broad-based collaboration rather than change driven by a single company.

Intel, of Santa Clara, California, also will reveal a tie-up with Orange, Europe's third largest mobile phone operator, to build various mobile phones based on Intel chips.

Otellini said Intel was in talks with all of the world's top ten mobile phone makers on how they might begin using its chips in future handsets. Motorola and Samsung are the only ones selling a small number of phones using Intel chips.

In private meetings in Cannes, Intel is showing off designs for two generations of phones, one aimed to go on sale this year, and a second one that will go on the market in 2005, Otellini said.

This technology is designed to work on so-called "2.5G" and "3G" mobile phone networks, respectively. These networks are designed to offer improved levels of video and other multimedia services not possible on older "2G" voice and text phones.

Otellini plans to show off designs for 2.5G phones due out later this year that combine three major, sometimes competing, wireless standards into one -- GPRS international mobile phones, Wi-Fi medium-range wireless and Bluetooth wireless for short-distance data connections.

This crop of Intel-based phones would play digital music files and include a 1.3 megapixel digital camera for pictures and limited video -- in line with rival phones now on sale.

The designs will be offered to phone manufacturers around the world, including electronics manufacturing powerhouse ASUSTek of Taiwan, which has agreed to create a series of phones with Intel chips.

In search of partners, Otellini said he could envision working with Qualcomm Inc., a top wireless chip maker, on future phones. He also said he was keen to strike a deal with Nokia, the world's biggest handset maker.

Intel officials said the company plans to differentiate its phones by embedding technology that has shipped in its computer chips for much of the last decade, which will make it far simpler to move computer data back and forth to mobile phones.

Also during his speech, Otellini will outline Intel's ambitions for WiMAX, an emerging technology for delivering high-speed communications to residential users wirelessly. WiMAX works over distances of up to 30 miles.

He will beat the drum for WiMAX in the same way Intel has effectively done for Wi-Fi to make it a widely accepted method of high-speed Internet access at up to 25 meters or more.

Otellini said Intel will release its first WiMAX chips later this year and that these devices will appear in notebook computers within two years and in mobile phones by 2007, or three years out. He predicted that WiMAX will be widely adopted between 2006 and 2008.

"My big message is that no one standard is going to win," Otellini said ahead of his speech.

Instead of a battle over which competing technology standards would win, Intel sees each co-existing and reinforcing the others. "Consumers want us to integrate this so they don't have to worry."