Dow Jones reports that the world's largest chip maker Intel
Intel will be entering a market with entrenched powerhouses. The cell-phone chip market is dominated by Texas Instruments
Intel's technology, meanwhile, combines communications, applications, and flash memory onto a single chip, and is intended to drive down costs. Although Intel is focused on features, price is an important factor for DoCoMo.
KDDI, currently #2 overall in Japan, dominates the 3G market with 10.3 million subscribers -- 8 times as many as DoCoMo. In October, KDDI added 27% more subscribers than did DoCoMo. For the record, new subscribers is only part of what's troubling DoCoMo.
The company's latest quarterly earnings showed profits were down 7.8%. And over the last two years it has written off half of the $16 billion it invested in overseas phone companies.
So why is Intel even interested?
DoCoMo is an innovator -- and it is still cash rich. The company recently formed two joint ventures (JVs) with Sony
DoCoMo should also be able to convert, over time, a majority of its 2G customers to 3G services. Since DoCoMo has three times as many customers as KDDI, the future looks bright for DoCoMo -- so long as it offers competitive products. Intel can provide the chips with strong features, low prices, and top performance.
Intel, for its part, gets a partner that will push its technology into the marketplace. Like Sony, Intel wants to be number one and is willing to form a JV to get the traction it needs.
Still, it will be at least two years before the Intel/DoCoMo venture starts to produce product. The next interesting announcement should be the percentage of the JV Intel will end up owning. Sony, for context, owns 60% of its DoCoMo JV.
Bottom line: It is too soon to know if this will pay off for Intel. On the surface, it looks like Intel picked a well-positioned partner with cash to spend.
Is this DoCoMo business a cool name but a bad idea -- of vice versa? Talk it over on the Intel discussion boards. For a 30-day free trial to the discussion boards, click here . W.D. Crotty can be reached at email@example.com .