Intel Pushes Forward in Wireless World
December 03, 2001 11:52
By Kirk Ladendorf, Austin American-Statesman, Texas
Dec. 3--Intel Corp.'s Ron Smith handles the new NTT DoCoMo cellular phone with gentle respect. It's small.
It has a color display screen. It can receive high-speed data communications. But most importantly, it has several Intel chips inside.
The phone's data processor is an Austin-designed Intel StrongArm chip and its memory is comprised of Intel flash memory chips. If the phone's manufacturer, Japan's NEC, sells a bunch of them, then revenue to Intel's fledgling wireless chip business, which Smith heads, should expand nicely.
Intel, the kingpin of personal computer hardware, is pushing forward with its campaign to muscle into the wireless world, ready to take on established players such as Texas Instruments Inc. and Motorola Inc. The semiconductor giant is moving ahead with its technical tool kit, using technical development centers in Chandler, Ariz.; Colorado Springs, Colo.; San Diego and Folsom, Calif.; and Austin to collaborate on the project. At the same time, Intel is using its marketing clout to win the attention of emerging players in the wireless industry, including electronics makers in Asia that want a larger share of the wireless phone business.
As Smith sees it, his company's timing is exactly right, despite the fact that the cellular phone business is in the middle of a slump right now. Wireless phone sales are expected to drop slightly this year after years of rapid growth.
But wireless phones and wireless networks are just beginning to reach the point at which they can handle significant data downloads from the Internet or complex messages between wireless users. For all the snags and complications, wireless data is going to happen in a big way, and Intel says it is ready for the industry shift.
Austin is an important part of Intel's wireless plan. The company is selling its low-power StrongArm product, but starting early next year, the company will unveil XScale, a next-generation chip that Intel says will deliver 10 times the performance of the Strong-Arm chip with the same power consumption. The Austin design team is charged with adding the right kind of special-function circuitry to XScale to make it well-suited for next-generation wireless devices.
Austin also is home to the joint-development effort between Intel and Analog Devices Inc. to produce low-power digital signal processor chips, which wireless phones and other products need to handle the communications functions.
Both those chips are crucial to Intel's wireless plans. Intel employs about 550 people in Austin, but fewer than half of them are tied to the wireless business.
Smith's optimism about Intel's role in the wireless business comes despite the fact that the company had been a minor player in the wireless business until very recently. Intel concentrated on dominating the personal computer universe while Texas Instruments and Motorola, among others, vied for leadership in the world of cell phones and pagers. Intel wants a larger share of the wireless chip market, which slipped below the $15 billion sales level this year, but is expected to more than double in size during the next four years.
Intel's traditional share of the wireless business has been limited in the past to supplying flash memory chips for wireless phones, but Smith says the company's involvement in the wireless world is expanding rapidly. The company wants to use its strength in flash memory to build a larger foothold in the market for the new data-intensive wireless devices.
The wireless world is moving toward the data-centric computer world, Smith says, and Intel knows computers and software.
Smith's message to his technical team fits his straight-forward style: "Get the product out. Get the design wins and get the revenue. It's a simple message. That's what we've got to do."
This is a high-stakes game. Intel's wireless group accounted for more than $500 million in sales in the most recent quarter, with flash chips accounting for most of those sales. But the market opportunity is immense.
"Intel knows that in 2006 or so, cellular phone shipments will reach 1 billion handsets," said industry analyst Will Strauss with Forward Concepts in Tempe, Ariz.
"They also know that only two or three companies in the world can handle that silicon volume. They are planning to get a piece of that market."
For the past decade, the wireless phone business has been dominated by three companies: Finland's Nokia, Sweden's Ericsson and the United States' Motorola. But, going forward, industry experts say Asian phone makers will win more business, and Intel plans to sell to many of those emerging players.
"Intel will be successful because of brute force," said analyst Strauss, "not necessarily because of their elegant approach to the market."
Despite its strength, Intel falls far short of supplying all the different kinds of chips needed to build a cellular phone.
That means it may have to work with another company to supply the necessary pieces that it lacks.
As wireless data technology gradually proliferates, Smith says Intel's computer background gives it an advantage.
Based on decades of experience in the personal computer market, Intel knows the key to success is bringing in hundreds of software developers to create captivating new programs for the products that its chips control. Designing systems that make it easier and cheaper for those software developers to do their job is part of Intel's advantage, Smith said.
"We have only been in this business for 20 years," Smith said. "We have gone down a lot of roads and run into many cul-de-sacs along this highway. We understand what it's going to take. It is not that magical."
Intel's clout and its pocketbook have helped create a support group --Smith calls it an ecosystem -- around its wireless technology that takes in more than 700 member companies ranging from software developers to wireless carriers.
"When you are seeding the market, you have to have a lot of people working on a lot of different applications and capabilities and products," Smith said.
Wireless phones are by far the largest part of the market, but wireless-enabled PDAs and other devices also show strong potential growth.
"There is going to be a lot of experimentation and a lot of room for different form factors," Smith said.
"Some will be niche products and some will be mass sellers, and I can't predict which is which."
-----
To see more of the Austin American-Statesman, or to subscribe to the newspaper, go to austin360.com
(c) 2001, Austin American-Statesman, Texas. Distributed by Knight Ridder/Tribune Business News. INTC, NTDMY, NOK.A, ERICY, MOT, NIPNY, TXN,
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