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Intel mobile still a challenge

Thursday, January 31 11:13:17

Intel Corp, the world's biggest chipmaker, opened a new front today in a long and stuttering campaign to get its processors into mobile phones, although it appears to still have a long way to go.

It joined PC maker Acer Inc in Bangkok to unveil the Liquid C1 smartphone, a $330 device running Google Inc's Android operating system, which will be launched first in Thailand and then rolled out across Southeast Asia, one of the fastest-growing markets for mobile phones.

"We've made a conscious effort to go after these fast-growing markets as our first foray into the business," Mike Bell, who heads Intel's mobile division said in a telephone interview.

The company's ninth such device in nine months, the Liquid C1 represents how far Intel has come in convincing bigger name manufacturers to take a chance with its mobile chips as the sales of personal computers and laptops plunge.

But analysts say it also shows how far it still has to go to get a foothold in a market dominated by the likes of Qualcomm Inc and Nvidia Corp.

"First and foremost they have to prove they can play in this space at all," said Scott Bicheno, senior analyst at Strategy Analytics. "There's no obvious technical fault with Intel's chips. It's just that the incumbents are very well established."

Intel has little choice but to get into mobile. It saw revenue fall 3 percent in the last quarter on weak sales of PCs, part of a steady decline in revenue growth since 2009.

It has also watched as devices like Apple Inc's iPad cannibalise sales of PCs.

So, in the past year, the company has launched phones with Intel chips in Europe, Africa, Latin America, Russia, India and China.

Some were effectively designed and built by Intel as what it calls "calling cards", convincing carriers like Orange to brand and offer the phones on their own networks in France and the United Kingdom. Last year, it persuaded Chinese hardware manufacturers like ZTE Corp and Lenovo Group Ltd to build their own phones with Intel chips.

Sales have not been stellar.

Intel declined to share data, as did ZTE and Lenovo. But Melissa Chau, senior research manager at technology research group IDC, said while Lenovo shipped more than 1 million units of its best-selling phone in China in the third quarter of last year, it shipped only about 20,000 of its first Intel phone, the K800.

"That's the scale we're talking here," she said.

The problem for Intel is a historical one. By its own admission it has been slow to move in a fast-changing landscape where even a decade ago it was clear that desktop PCs and even laptops were giving way to smaller, lighter, connected devices for which lower power consumption was at least as important as processor power.

In the past year or so, however, Intel seems to have shifted focus to mobile applications. It acquired Infineon Technologies' wireless chip business in 2011 and hired and promoted phone experts like Bell.

"These guys are phone specialists and they've really turned us around in terms of of the way we approach the market, the way we approach design," said Uday Marty, managing director for Intel in Southeast Asia. ( C ) Reuters