Lucas van Grinsven and Duncan Martell
NEW YORK: Intel Corp., the world's largest chipmaker, has set even more
aggressive goals than its partner Microsoft Corp. to supply the building blocks
for mobile phones, its chief financial officer said on Thursday.
Microsoft, the world's largest software maker, said last week that it aims to
have its software on 100 million cellular phones within three to five years, up
from zero today. At current levels, that target would represent a 25 per cent
share of the global market.
"I would not be satisfied with 100 million phones" in the next
three to five years, Andy Bryant, chief financial officer for Santa Clara,
California-based Intel, told Reuters in a round-table discussion here.
Intel is targeting the mobile phone industry as one of its next engines for
growth, seeking, at least partially, to recreate its success and business model
in the personal computing industry. Intel's microprocessors power about 80 per
cent of the world's PCs.
Bryant said Intel's strategy is to dethrone cell phone manufacturers such as
No. 1 Nokia Oy of Finland and US-based Motorola Inc. Nokia makes almost four of
every 10 cell phones sold worldwide, and about 400 million cell phones are
forecast to be sold this year, about flat compared with 2001.
"Right now, companies which have the name on the box grab most of the
value," Bryant said. "We would like to see the business model change
to go to more added value in silicon (chips)."
Intel, with its expertise in designing semiconductors, is confident that it
can compete in a business already dominated by powerful players such as Nokia
and Motorola, Bryant said.
Intel, Microsoft tie-up on phones
Last week, Intel and Microsoft announced plans to work together to develop
blueprints for making cell phones. The cheap blocks of silicon from Intel and
software from Microsoft would enable any electronics manufacturer to produce
advanced phones quickly.
Advanced phones typically can send and receive e-mail, pictures and play
games and music, in addition functioning as a normal wireless phone. Intel will
also provide chips for cell phones that would run software from companies other
than Microsoft, part of an increasing effort to be agnostic when it comes to
operating systems.
Intel is looking to second-tier cell phone providers, who do not have the
resources to develop advanced phone software, to be the first customers for its
microchips.
But Bryant conceded that Intel's strategy could fail if these players decide
not to ally with Intel and Microsoft, which have yet to prove themselves in an
industry dominated by Nokia, Ericsson and Motorola.
"Either the second-tier phone providers such as the Japanese become our
allies or they decide it's not worth fighting the battle," Bryant said.
"Sometime this quarter, names will be announced," he said, referring
to customer wins. But Bryant added: "There's going to be tension (with
Nokia, Ericsson and others) and we could lose this."
At the moment, cell phone manufacturers control the entire design,
development and production process of cell phones, including the specifics for
microchips inside the phone.
In response to Intel's and Microsoft's announcement, Nokia quickly came out
with its own partnership with chipmaker Texas Instruments Inc., offering silicon
chips from Texas Instruments and software from Nokia to outside electronics
manufacturers. Texas Instruments is the biggest provider of semiconductors to
cell phones .
Bryant, however, said that Intel and Microsoft would offer a more complete
product incorporating memory and a full set of software for running a cell phone
.