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Consumer Electronics Show: Intel's Smartphone Announcement

Published: Wednesday, 11 Jan 2012 | 10:47 AM ET
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By: Jon Fortt
CNBC, Tech Correspondent

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Intel signed up with Motorola and Lenovo to use its chips in smartphones this year, the company announced at the Consumer Electronics Show.

Intel has signed up Motorola and Lenovo to use its chips in smartphones this year -- a surprise that is the most consequential announcement of the Consumer Electronics Show so far from a stock perspective.

There's also more to this than meets the eye.

Yes, Intel [INTC  Loading...      ()   ] CEO Paul Otellini had promised that Intel's Atom chips would make their debut in phones in the first half of 2012, but the chip giant had made similar vows in previous years and failed to deliver. Most recently, Intel's pact with Nokia fell through, mainly because Nokia abandoned the Intel-tuned Meego OS in favor of Microsoft's Windows phone [  Loading...      ()   ].

With this latest announcement, Intel has not only signed up two partners, but two who are known for their hardware chops. Lenovo, while a novice in smartphones, has a thriving PC business and a valuable brand in China. Motorola is in the process of being acquired by Google [GOOG  Loading...      ()   ].

How positive is this for Intel?

That depends. If the companies -- particularly Motorola [MMI  Loading...      ()   ], with its Q3 launch -- can build a premium phone for the U.S. market around Intel's chip, it could be the beginning of a crucial growth opportunity.

But there are considerable hurdles.

CES_BADGEConsumer Electronics Show 2012 Coverage

Even if Motorola's Intel-based phone is cleared to operate on a major U.S. network in time for a Q3 launch, which is no simple task for a phone based on new silicon, it will face off against a new iPhone from Apple [AAPL  Loading...      ()   ]. It will also likely contend with new phones from Microsoft's partners.

And then there's the question of performance: Though Intel has told the press that its chips will be able to handle most Android apps built for ARM processors without recompiling, it seems likely that graphics- intensive apps won't run as well.

Then there's the differentiation question: What will Intel Android phones do better than ARM Android? The answer may be web browsing and the handling of HTML5 and JavaScript. That could be a challenge at a time when many consumers judge a phone on its app quickness, not browser speed.

Questions?  Comments?  And you can follow Jon Fortt on Twitter @jonfortt

© 2012 CNBC.com


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