You certainly can't blame a tech giant like Intel (NASDAQ:INTC) for trying new things. A company that already dominates one market can only grow so far before hitting a ceiling. But attempts to move the $123 billion silicon behemoth beyond microprocessors for desktops and laptops have led to a series of disappointments spanning several years. Unfortunately, the company's now gearing up for another dubious crack at the mobile-device sector.
Intel threw in the towel on its last foray into mobile processors in 2006, selling the division to Marvell (NASDAQ:MRVL) for $600 million. But a rejuvenated Intel is once again taking on mobile chip leaders such as Qualcomm (NASDAQ:QCOM), Texas Instruments (NYSE:TXN), and ARM Holdings (NASDAQ:ARMH) by pushing its new line of Atom processors into smartphones.
I'm a little skeptical of Intel's chances this time around. In a recent interview with the Financial Times, Intel CEO Paul Otellini said, "If you accept that the value proposition of the high end of the mobile phone market is full Internet access that happens to have voice, my view is that it's easier to add voice to a small computer than vice-versa."
Well, I certainly don't accept that value proposition. And the notion that the chief of one of the world's premier silicon makers believes that the high-end mobile phone market is essentially moving toward broadband-enabled computers with microphones attached is astonishing. While it's likely Otellini doesn't hold such a simplistic view of the mobile market, Intel has nonetheless previously shown that it believes mobile phones will move closer to computers, rather than the other way around.
Wrong. Dead wrong.
If Intel believes that a significant portion of smartphone users will be gravitating toward connected laptop functionality, more than a few warm bodies are asleep on their keyboards in Santa Clara. True, new markets for ultraportable Internet devices will likely present tantalizing opportunities, but Research In Motion's (NASDAQ:RIMM) BlackBerry is not wildly successful because it is a computer at its core. Its success lies in its efficient communications capabilities -- worlds beyond merely slapping a microphone and speaker onto a slick device.
If Intel can't keep a clear distinction between mobile computing and mobile phones, it will continue to flounder in the space. The company would be better off focusing on other areas of success, rather than trying to redefine consumer devices.
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