June 5, 2001 12:15 PM PDT

Intel inches into handheld market

Intel may be in the unfamiliar position of trying to break into a chip market, but new deals with handheld computer makers indicate the company may be firming up its foothold in this niche.

The chipmaking giant already has a small but solid position in the mobile device market. Its StrongARM processor is at the heart of two handhelds using Microsoft's Pocket PC operating system--Compaq Computer's iPaq and Hewlett-Packard's Jornada--and is in several cell phones and Web-surfing appliances.

Intel has been trying to mount a more serious challenge against current market share leader Motorola, whose Dragonball processor is found in about 75 percent of handheld computers.

StrongARM is a family of processors specifically aimed at handheld devices. Digital Equipment and Advanced RISC Machines--now known as ARM Holdings--initially developed StrongARM; but in 1997, Intel acquired the chip, along with Digital Equipment's Hudson, Mass., chipmaking plant in a patent suit settlement with the company.

Intel's StrongARM chips provide handheld makers with enough horsepower to tackle multimedia applications, such as playing downloaded audio and video, which analysts believe will be the next frontier for handhelds.

Several handheld manufacturers are already lining up and committing to Intel not only for its chips, but also its marketing muscle.

On Monday, Intel said Sharp will use a StrongARM processor in its upcoming handheld, which will use the Linux operating system. Sharp would not comment, other than to say final specs will be announced in the fall.

In addition, Acer is expected to use a StrongARM processor in its upcoming handheld, which will use the Palm operating system.

"Motorola is in definite danger of finding itself with some stiff competition for the first time and that could get worse if Palm jumps ship," IDC analyst Alex Slawsby said.

Motorola's trump card has been that it counts No. 1 handheld maker Palm as a customer. However, Palm has announced that it will transition its products to ARM-based technologies. Palm has not publicly announced which ARM-based chip it will use, but sources say the company is favoring Intel's StrongARM processor.

At the same time, Motorola is planning to intregrate ARM's processor core into future Dragonball chips to handle the multimedia features in upcoming Palm OS-based devices.

However, Intel is also planning an update of its own. The Santa Clara, Calif.-based chipmaker will update StrongARM this year with its next-generation processors for handheld devices called XScale.

XScale processors are expected to reach higher clock speeds using less power than StrongARM processors. Current StrongARM processors run in the 200MHz range. Intel has not announced clock speeds for the XScale processors, but the company has demonstrated it at 1GHz.

 

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