Apple

Is Apple really that much of a chip hopper?

If Apple follows through and uses a chip designed by its latest acquisition, PA Semi, in a future product, the company will have made major bets on Power, x86, ARM, and Power again in just this decade. What, no love for SPARC or MIPS?

A PA Semi representative on Wednesday confirmed last night's news that Apple has paid $278 million for the low-power chip designer. Led by prominent chip designer Don Dobberpuhl, the two-and-a-half-year-old company makes chips for embedded devices based on IBM's Power instruction set.

So what might Apple want with PA Semi? Forbes reported that Apple plans to put its chips inside the iPhone, but several possibilities are being considered this morning, as the industry tries to digest this piece of news.

Apple's iPhone group almost assuredly doesn't want PA Semi's current product. The PWRficient PA6T-1682M is the only product listed on PA Semi's Web page. It's a dual-core 64-bit chip designed for high-performance computing and embedded applications--things like server appliances or sophisticated telecommunications gear.

It's a pretty powerful chip that consumes between 5 watts and 13 watts of power, in most situations. However, while that may be ideal for a server, networking switch, or even a MacBook, it's way too much for a handheld device like the iPhone or the iPod Touch. The Samsung chip inside the iPhone is based on a core designed by ARM that consumes about 279 milliwatts running flat-out at 620MHz. Apple uses a slightly slower version.

Even Intel's Atom chip, which is going into so-called mobile Internet devices, consumes less power than the PA6T-1682M (that's a hell of a name). To date, no other company appears to be developing a smartphone based on this generation of Atom.

A few interesting possibilities perked up as I traveled across the Web this morning. A commenter at The Register, picked up by Slashdot, suggested that Apple could have a game console in mind. That would be a perfect application for this kind of chip, though I'm not sure that if Apple has the desire to get into game consoles, despite filing a patent for that type of device. Maybe Apple TV 3.0 could use a performance boost, which Apple would certainly get, switching to the PA chip and dropping an older version of Intel's Pentium M processor.

Apple could be planning to release a mobile Internet device of its own based on the chip. Again, power consumption concerns raise a red flag here, as you'd have to design any handheld device to accommodate the worst-case scenario power consumption of PA's chip: 25 watts. You'd really need something bigger to effectively dissipate that much heat, as it would require a cooling fan.

Another interesting possibility could be that Apple wants to get more involved in the server market. PA Semi initially wanted to get its chips inside Apple's notebooks, and was apparently in discussions with Apple right up until its decision to embrace Intel's notebook processors in 2005. After that defeat, PA Semi pitched its chip as ideal for clusters of low-power servers.

The most likely scenario is that Apple wants a future PA Semi product for a handheld, server, notebook, or something in between. Dobberpuhl and his team of veteran chip designers are some of the brightest minds in the industry, with an extensive track record. The chipmaker also brings along a low-power patent portfolio that would be attractive to any company focused on low-power computers.

Initially last night, distracted by the epic Game 7 played by the San Jose Sharks, I was floored by the possibility that Apple might switch back to Power after such a public divorce. Veteran Apple software developers must have whiplash at this point, working with Power, ARM, and x86 in just three short years.

But I failed to remember (helpfully reminded by TalkBackers this morning) that when Apple made the switch to Intel's chips, it directed software development down the Universal Binary path. Any piece of software written for the Universal binaries will run natively on either x86 chips or Power chips, which allows PowerPC-based Mac owners to keep their systems and upgrade to new software, such as Mac OS X Leopard.

There's an extensive list of applications on Apple's Web site that were created with the Universal binaries. That means it would be relatively painless for Apple and its partners to switch back to the Power architecture for anything that runs on the Mac, since Universal software would run natively on PA Semi's chips.

Could Apple do the same for the iPhone, at some point down the line, when PA Semi is able to get power consumption down to milliwatt levels? We learned during the iPhone SDK event in March that the iPhone's OS X is almost exactly the same thing under the hood as Mac OS X, which would suggest that it also was developed with Universal binaries in mind that could run natively on ARM and other instruction sets, such as x86 or Power. That's not at all certain, but it's an interesting possibility.

That would mean that Apple has figured out a way to develop its software as to take advantage of whatever the best chip on the market is at a given time, without having to worry about porting concerns. Don't like Intel's road map? Switch to PA Semi. Don't like PA Semi's next big idea? Switch back to Samsung. That might be a stretch, but if true, it would send a shudder down the spine of many a chip industry executive.

Finally, there's the possibility that Apple is working on some new type of handheld computer that needs something different than what the ARM community or Intel has in mind two or three years down the road. I can't imagine that Apple would buy Dobberpuhl's company without giving that team some kind of project.

Don't count on much official word from either Apple or PA Semi just yet. Apple spokesman Steve Dowling told Forbes that the company doesn't comment on its plans for acquired companies, and the PA Semi representative said she couldn't even discuss whether the company's engineers would be moving across Silicon Valley from Santa Clara to Cupertino.

In any event, financial analysts awaiting Apple's earnings conference call later this afternoon will probably attempt to get an answer out of COO Tim Cook or CFO Peter Oppenheimer. Late last year, investors had wondered what Apple was planning to do with all its cash. Now they have some idea.

SANTA CLARA, CALIF.--Intel CEO Paul Otellini sought to reassure major investors Wednesday that the world's largest chip maker is still poised for strong growth into new areas like mobile computers, and can maintain its current lead in PC technology.

Otellini reiterated much of Intel's pitch from the last six months that the world of handheld mobile computers and low-cost PCs can supplement the slowing-but-steady growth of the PC market. Intel is investing new products like its Atom processor and attempting to break into these new markets by reminding software developers and device makers that Intel's chips are used to run today's PC-based Internet, and are ideal for allowing tomorrow's mobile devices to access that Internet.

Investors from major financial institutions might be forgiven for being a bit skeptical coming off Intel's news this week that its gross margins would sag this quarter on falling flash memory pricing. But Otellini promised "this is a business that will not be a drag on Intel," and that the company was finding ways to make sure the volatile flash memory market does not hurt its bottom line.

Instead, Intel's CEO wants investors to focus on the potential for Intel's large bet on mobile devices. The company has been on a evangelical push for the last six months touting the virtues of the x86 instruction set in the world of mobile devices. The idea is that anything that can run on a PC--take Adobe's Flash, for example--would be able to run on a handheld device with one of Intel's Atom processors.

To break into this market, Intel is reducing the time between when an idea gets approved to production starting with the new Atom generation of products, Otellini said. The goal is to get from idea to prototype in six months, and then from prototype to production in another six months. PC processor designs take much longer, several years, from idea to production.

Intel also thinks it will benefit as people start owing and using more than one sophisticated computer, whether that's a home desktop, a work laptop, a smartphone, or something else we haven't even thought of yet.

Sean Maloney, Intel's sales chief, took the idea further as he talked about Intel's Netbooks project to build low-cost notebooks based on the Diamondville derivative of the Silverthorne processor. Intel sees Netbooks as almost "starter PCs," borrowing that time-honored marketing tradition of getting young kids hooked on a basic inexpensive computer and then sticking with them as their tastes mature and their demands grow more intense.

Intel is at a very interesting time in its history. PC and server growth has slowed, although it continues along at a "low-double digit" growth pace, Otellini said. That's not the kind of growth that gets investors all excited, however, they like the kind of growth more in the 20 percent range.

Having seen these trends a while ago, Intel has been searching for its next big thing for several years. But while it does that, and tries to build a business around handheld mobile computers and low-cost PCs, it has to keep an eye on its main markets.

One major area sorely in need of improvement is Intel's graphics tehcnology, currently built on outdated manufacturing equipment as a way of wringing productivity out of older factories. That is going to change, said Otellini, as Intel starts moving more and more of its chipset production to newer factories using the latest manufacturing equipment.

This will have a few benefits, he said. It will allow Intel to build chipsets with more transistors dedicated to graphics, since it will no longer have to use older technology that can't build transistors as small as its latest and greatest stuff. It will also help Intel reduce expenses as it moves toward "fewer, larger factories," Otellini said.

And Intel remains hard at work on Larrabee, its "many-core" programmable chip that appears to be designed for a variety of tasks that could well include graphics acceleration. By 2010, Intel hopes to have shipped Larrabee and moved all of its graphics transistor production to its leading-edge manufacturing technology, so that the same equipment is used for both CPUs and graphics, Otellini said.

Intel is in pretty good competitive shape at this point, with AMD still working to get into the quad-core era. But Intel has had trouble breaking into new markets outside the PC or server in the past, which is why investors will be watching closely over the next two years to see what Intel's talking about at that point.

Conspicuously missing from the spotlight during Intel's presentation this year? Viiv digital-home PCs, UMPCs, and cell phone processors, which have played prominent roles in past Intel investor rallies. There may very well be a market for starter PCs and x86 smartphones, but if history is any guide, Intel will strike out on at least one of those efforts.

Texas Instruments has a new OMAP chip to set upon the world, and this time around it's eyeing more than mobile phones.

The new OMAP3440 made its debut in Barcelona at Mobile World Congress 2008. This is the latest in TI's line of OMAP applications processors, which are the equivalent of the CPUs inside PCs.

TI sells standalone applications processors like the 3440 to customers such as Nokia for use in high-end smartphones, but it is also talking up the potential for the 3440 as a chip for Mobile Internet Devices (MIDs). That's Intel's name for an evolving class of handheld computer that's a bit more powerful than a smartphone but smaller and longer running than a notebook.

TI isn't willing to give Intel any ground when it comes to portable handheld devices. Intel has already tried to gain ground against chipmakers like TI, Samsung Electronics, and Freescale Semiconductor with its XScale program. The XScale chip did fairly well as a standalone applications processor, but attempts by Intel to also get into the cellular modem business flopped, and the company offloaded the division in 2006 to Marvell Technology Group.

The new chip, like the Nvidia APX 2500 also unveiled Monday, can record and playback 720p high-definition video. It uses ARM's Cortex A8 core running at 800MHz and can be used with any modem. TI hopes to have samples out for customers to start testing in phone and MID designs by the end of the second quarter.

After holding off on the release of a faster iPhone because of concerns about battery life, is Apple really prepared to take a step backward with Intel's Silverthorne chip?

AppleInsider reported Friday that Apple has decided to use Intel's upcoming low-power Silverthorne chip in "not one but multiple products currently situated on its 2008 calendar year product roadmap." Silverthorne is Intel's latest push to capture the handheld/mobile phone market as part of a product concept called the Mobile Internet Device.

The report goes on to say that the most likely candidates for Silverthorne are a 3G iPhone and the Newton-like tablet computer that AppleInsider reported on earlier in the year. Based on what we know about Silverthorne, I think the subtablet rumor might make sense, but a Silverthorne iPhone is unlikely.

Intel plans to release more details about Silverthorne at the Intenational Solid State Circuits Conference in February, but we already know from the advance program, and from what Intel said about the chip last year, that we can expect Silverthorne to behave like a much smaller 2004-era Pentium M processor that consumes just a watt or two of power, compared with the 35 watts consumed by Intel's Core 2 Duo notebook processors of today.

But that's still not enough for a phone. According to several iPhone teardowns, Apple is likely using the Samsung S3C6400, or some special equivalent built just for them, in the iPhone. That chip is based on the ARM1176 core, which at 620MHz consumes just 279 milliwatts. That's running all-out, whereas most of the time you're actually going to be drawing much less power than that. Silverthorne, by contrast, will consume 500 milliwatts of power at minimum, and probably only when it's doing nothing in idle mode.

Those numbers just aren't going to work in a phone, especially an Apple phone, if the company really is so concerned about power consumption that it has held off on releasing a 3G iPhone until the power consumption of that modem improves. Those numbers could work, however, in something more along the lines of a powerful handheld such as the rumored "Return of the Newton" that was discussed earlier this year. Based on the concept designs shown by Intel last year for Silverthorne-era devices, however, this would be something much larger than a phone, more along the lines of a UMPC or a handheld gaming device like Sony's PSP.

Given the close relationship between Apple CEO Steve Jobs and Intel CEO Paul Otellini, as well as Otellini's commitment to low-power designs, I would not at all be surprised to see Apple and Intel hook up on a future mobile phone or sleek mobile computer. But I wouldn't expect to see it until at least 2009, when Intel releases a chip called Moorestown that is expected to reach the milliwatt operating power of current ARM designs. Some of the concept devices that Intel showed off as Moorestown-era projects looked an awful lot like the iPhone.

Apple had to design the OS X operating system inside the iPhone and the iPod Touch around the ARM instruction set, because there's really no other realistic option right now for smart phones. But it might be looking at the development resources needed to port all of its software (iLife, iWork, GarageBand, etc.) over to ARM, and balking at the amount of time and energy that would require. If Intel can deliver an x86 chip with similar/better power and performance characteristics to the chips built by ARM's partners, it could be a very attractive product, and that's the meat of Intel's sales pitch to the phone makers.

Of course, ARM's partners will be out with dual-core chips by then that could tilt the performance equation solidly in its favor, while staying within the same power envelope. We've got a long time to muse about that.

Phone makers aren't the only ones interested in Google's Android software.

Of the 34 companies that agreed to join Google's Open Handset Alliance, Intel's decision to participate is yet another sign that the chipmaker is looking for alternative software to run on its Mobile Internet Device (MID) project. Most of the attention around Android focused on the mobile-phone market, and with good reason, as that area will be the first to get a sense of whether Google and its partners can actually make headway in this area.

But the world's largest chipmaker would still like to be the world's largest chipmaker in 5 or 10 years, when the personal-computing market might look very different. Intel has scrapped its own plans to enter the smartphone market, and so it's approaching the future of mobile computing from the other side, trying to shrink PC technology into compelling devices.

To date, this hasn't really worked. Smartphone sales are growing every day, while the Origami/Ultra Mobile PC initiative hasn't caught on at all, and Intel's now reorganizing its mobile plans around the MID with plans to ship Linux-based devices alongside Windows ones. But hardware-wise, the Menlow generation of MIDs looks very similar to the older UMPCs, and I wouldn't expect the 2008 MIDs to sell dramatically better than the ones currently on the market.

But in a few years, this project might turn into something more interesting, perhaps around the time Intel releases a chip called Moorestown by 2010. The company has said very little about Moorestown, but CEO Paul Otellini has set audacious power-consumption goals for the project and the company has worked up a few concept models that look more like smartphones than mobile minitablets.

"End users desire the ability to take the full Internet with them, the experience they have on their PC, in a nomadic or mobile fashion," said Gary Willihnganz, director of marketing in Intel's mobile group. That's language straight from the playbooks of Apple's Steve Jobs and Google's Eric Schmidt, both of whom this year have emphasized their commitment to delivering a PC-like Internet experience on a handheld device.

Android comes into play here because Intel and its hardware partners will need software to run the Moorestown-class devices. At the Intel Developer Forum in September, company executives spent a fair amount of time emphasizing non-Microsoft software as part of the MID project. To be fair, they did include the obligatory PowerPoint slide with the usual language about how Microsoft is a very important partner for Intel. Very, very important.

But ladies and gentlemen, now joining us onstage in a special appearance, the developer of Ubuntu Linux, Canonical CEO Mark Shuttleworth! Ubuntu received several minutes of valuable airtime during Intel mobile chief Anand Chandrasekher's keynote speech, while Microsoft, the biggest software company in the world and Intel's closest partner for decades, was reduced to a single slide.

After it was apparent that the Windows XP-class UMPCs weren't going to succeed, and after Windows Vista appeared to actually take a step back in terms of power consumption, Intel started moving away from its longtime partner. In Beijing in April, Chandrasekher admitted that Intel has been urging Microsoft to develop a more power-friendly version of Windows.

Vista was designed for PCs. It requires relatively powerful processors and significant amounts of memory, and those requirements don't make it easy to develop a small, sleek, handheld battery-powered device that needs to last all day and cost less than $500.

Linux, however, is more modular than some of the other options out there. You don't need to support 20 years worth of legacy code when assembling a Linux mobile phone, or make hard choices about what to exclude from a computer operating system, like Apple did with OS X on the iPhone. You just pick and choose components from various open-source projects to put together everything you need to run a phone, or maybe a minitablet computer.

Sounds easy, but the promise of mobile Linux has gone exactly nowhere over the past few years: "It's still in science-fair project mode," says my colleague Stephen Shankland. Collectively, Linux is the second most widely used smartphone operating system, behind Symbian and ahead of Microsoft's Windows Mobile. But dozens of companies combine to produce that market share, and there's no guarantee that an application written for one flavor of Linux will run on a different implementation.

It would be very hard for a company like Intel to place a bet on any one particular distribution. The company is clearly hoping that Google unifies the Linux market to give Intel a safer option for MIDs.

Of course, it's far from certain what might eventually evolve out of the 34 companies in the Open Handset Alliance by next year. Intel isn't quite sure itself. "We don't have a good feel for what it's all about, or what its capabilities are, much less any idea of how consumers are going to be able to value (Android software)," Willihnganz said. And Microsoft appears to have gotten the message, with a project under way to develop a stripped down Windows kernel.

It's hard to know exactly what to think of Android right now, since we have no idea what it looks like. But don't think of Android as just software for smartphones; if Google pulls this off, it could have much broader implications for other parts of the tech industry.

Apparently the Newton doesn't fall very far from the Apple tree.

AppleInsider is reporting that Apple has a project underway to develop a minitablet computer based on the OS X operating system it has developed for the iPhone and the iPod Touch. The site is calling it "the return of the Newton," referring to the much-maligned but cult-favorite PDA that Apple sold in the mid-1990s.

The report describes a "slate" style device that's about 1.5 times bigger than an iPhone, with a high resolution display and the same touch-screen interface that's found on the iPhone. AppleInsider thinks we might catch a glimpse of this device at Macworld in January.

If true, this would appear to be Apple's take on Intel's MID (mobile Internet device) concept, rather than a PDA like the Newton. There's simply no market these days for the traditional PDA, as even basic mobile phones can do everything a PDA can do, just with more style. But there's not a huge market for UMPCs or MIDs at this stage of the game, either.

Apple's OS X and multitouch interface are definitely unique takes on the UMPC/MID concept. Many of the devices demonstrated by Intel and its partners last week at IDF required a stylus for navigation, reminiscent of PDAs. The wide-screen slate design reported by AppleInsider would allow for some interesting applications. This would also have a larger screen than either the iPhone and iPod Touch, and the size of the screen could make it easier to use the touch-screen keyboard in landscape mode, something that's on the wish list of many iPhone users.

Momentum is building around mobile devices designed for everyday folks, but I'd still be surprised if Apple were to launch its third multitouch device in 12 months sometime next year. Is there enough interest in handheld Apple gadgets right now to justify the iPhone, the iPod Touch and Newton 2.0?

The timing reported by AppleInsider--release in the first half of 2008--does coincide with the launch expectations for Silverthorne, a low-power Intel processor designed for just this type of device. Intel executives were tight-lipped last week about their chances of working with Apple on Silverthorne-based devices, probably not wanting to get sent to the principal's office for talking out of turn about Apple.

The ongoing tussle between Intel and AMD has dominated the news in recent weeks, but there's another potential battleground shaping up for Intel that could have a huge impact on personal computing.

A major topic I want to cover over the next several months is the looming showdown as the smart phone industry tries to develop more powerful computers, and the PC industry tries to build smaller and smaller computers. This week has provided a decent glimpse of Intel's vision of where it thinks the industry needs to go with its Silverthorne processor, designed for a new concept of computer called the Mobile Internet Device.

We're looking at a major architectural battle over the next three years or so: the ARM instruction set, which dominates mobile phones, versus the x86 instruction set (Intel, please stop calling it Our Architecture). ARM isn't widely known outside the industry, but it designs processor cores for chips that power more than 90 percent of the mobile phones on the planet. Intel, you've probably heard of at one time or another.

Both companies and their partners will be aggressively courting computer users and software developers over the next several years. Intel is trying to find its next big source of growth by scaling down into power-sensitive areas such as MIDs, which are basically minitablet computers. ARM wants chip makers to use its cores in more powerful smart phones, such as Apple's iPhone, which uses an ARM-based chip made by Samsung. Both companies need the support of software developers who will be developing applications for their devices, and whoever has the best combination of compelling design and need-to-have applications will have the early lead as the first quarter of the computer industry winds to a close.

I'll get ARM's side of the story in more detail over the coming days. But Intel is contending that it has a major advantage in that all the software developed on and for PCs will run on its Silverthorne chips for MIDs, said Anand Chandrasekher, senior vice president and general manager of Intel's ultra mobility group.

Chandrasekher asserted that software developed for chips based on ARM cores aren't necessarily compatible. He said that's because ARM's licensees implement slightly different combinations of ARM technology, and there are no APIs (application programming interfaces) that lets application developers write an application that will run across those many different implementations. "If a smart phone is going to become more of a data oriented device, then it's going to have to run applications, then compatibility matters," he said.

Intel is promising that any and all software written for PCs will run on MIDs. This does appear to be a more compelling argument for a software developer trying to decide where to place its bets. However, that's hardly a stamp of approval for the MID project at large.

If we've learned one thing this summer, it's that people are finally ready to start figuring out what they want on a mobile handheld device. The physical design matters, the user interface matters, and the applications matter. The key question is in what proportions. Intel might have an advantage when it comes to application development (although ARM probably has a retort), but will that matter in a world where more and more applications are probably going to delivered over the Internet?

I'd like to try and figure this out. Watch our site for a longer piece examining the two chip instruction sets and what they bring to the fight. This will take years to evolve, with things probably starting to heat up around the time Intel releases Moorestown, the successor to Silverthorne. Chandrasekher isn't saying much about Moorestown, but Intel is showing off these concept devices as a preview of what it thinks will be possible with that chip. One of them looks awfully familiar.

SAN FRANCISCO--Intel's a big company, with lots of money and smart people. It will need both to take over two separate industries.

The company's official search for the next big thing is settling quite definitively on mobile computers. But this is actually two big things: not only does Intel want to create an entire new category of handheld computers called Mobile Internet Devices, it wants to set up a whole new network to service those devices.

Intel executives Dadi Perlmutter and Anand Chandrasekher laid out the company's mobile strategy Wednesday here at the Intel Developer Forum during a pair of morning speeches. For the past several years, Intel's mobile strategy has centered around notebooks, but it's eyeing more than just PCs these days.

Intel firmed up plans to ship Silverthorne, a new processor with lots of integrated features, next year. Chandrasekher showed off prototype devices built on Silverthorne that look an awful lot like the UMPCs that didn't exactly fly off the shelves: larger than a smart phone, dependent on a stylus, and many with a fixed keyboard. He also discussed a newer low-power concept called Moorestown that will consume 10 times less power than Menlow, the platform that will house Silverthorne. Silverthorne itself consumes 10 times less power than the original Banias Pentium M chip, Chandrasekher said.

Intel is lining its Silverthorne chips up against the mobile industry's ARM-based processors in anticipation of the next silicon battleground. Having tried and failed to get its chips inside mobile phones, Intel's now trying to drum up demand for MIDs as a smart phone alternative to getting the Internet in your pocket, as Chandrasekher put it. He must have bigger pockets than I do, because none of the MIDs shown onstage at IDF would fit comfortably in my pocket.

The company will get a little closer to that goal with Moorestown. Chandrasekher didn't say much about that chip, but showed off a concept device that bore a striking resemblance to an iPhone that had been stretched lengthwise. Just a coincidence, I'm sure.

But whatever Intel's partners build with its mobile chips, they'll have to somehow connect to the Internet. That's where WiMax comes in. Intel has been talking up WiMax for several years as an alternative to cellular networks and to the expense of wiring the world with high-speed cable. It's finally getting ready to start testing the waters with its mainstream products.

Next year, Intel will refresh its notebook technology with a product called Montevina. That will come with a Penryn processor, a new chipset, and an integrated Wi-Fi/WiMax radio that will come as an option as part of the Centrino brand.

It will be interesting to see how many people opt for the WiMax radio, or even whether they know they have WiMax service available. Later today I'll get a chance to check out the devices themselves, and ask more questions about Intel's strategy for MIDs and WiMax. Stay tuned.

With the next two generations of Intel's chips set in place, the company is looking forward to a low-power future.

So said Intel CEO Paul Otellini in his keynote address kicking off the Intel Developer Forum at San Francisco's Moscone Center on Tuesday. Intel will launch the server and high-end desktop versions of its Penryn generation of chips on November 12, in line with previous reports to expect those chips before the Thanksgiving holiday. And Intel has also completed the design for Nehalem, a more radical overhaul of the company's chip blueprints.

The more interesting news was Otellini's goals for Intel over the rest of the decade. The company plans to ship a generation of processors on its 45-nanometer manufacturing technology by 2009 that come with graphics integrated right onto the processor, similar to what rival Advanced Micro Devices has planned for its Fusion chips. Intel will be investing in a joint venture with KDDI, a Japanese telecom company, with plans to build a WiMax network in Japan. And as expected, Intel talked up its low-power chips for MIDs (Mobile Internet Devices), with plans to reduce the power consumption of its handheld computer chips by a factor of 10 compared with the Silverthorne processor, expected next year.

This is all part of Intel's search for growth, which has meandered a bit this decade. Still, you've got to have a strategy for the future, especially as the PC market matures over the next five to 10 years. That appears to have three legs: first of all, don't squander the base market of PC and server processors.

To accomplish that, Otellini has implemented a more gradual series of manufacturing transitions that makes sure the company doesn't try to introduce a new architecture with a new manufacturing technology, and that it doesn't go too long in between revisions to its chips. The hope is that this prevents AMD from catching it napping and losing significant chunks of market share, which is probably the best description of the years from 2002 to 2006.

The second is graphics. AMD is forcing Intel's hand a bit in this area, with its purchase of ATI Technologies last year and the resulting plans for Fusion. Intel ships more graphics technology than anybody else on the planet, but that's only because it ships so many low-cost integrated graphics chipsets in desktops and notebooks, not because that graphics technology is extremely compelling. But the company wants to improve its performance in that area, hiring engineers and purchasing companies like Havok to improve its hardware and software expertise in graphics technology.

And in the long term, Intel will attack the graphics market by accelerating the pace at which it develops graphics technology by using its most advanced manufacturing processes. Historically, Intel's integrated graphics products used older manufacturing technology too antiquated for cutting-edge processors, but that's changing.

In 2009 Intel will ship a processor that has 45nm graphics technology built onto the chip, and in 2010 it will introduce a chip for which both the CPU and the graphics technology were designed for the 32nm manufacturing technology slated for production during that timeframe, Otellini said. And for the high end of the market, and possibly the discrete graphics market currently owned by Nvidia and ATI, Intel will produce a processor called Larrabee with many configurable cores and a shared cache memory. Otellini said Intel will demonstrate Larabee in 2008, but didn't share launch plans.

The third area of focus is mobility. Intel wants to be part of whatever design becomes the most popular mobile device. Having shed its ambitions for mobile phones, it now plans to compete directly against the smart phone industry with the MID, sort of a handheld notebook PC that hasn't really attracted much interest as of yet.

In 2008 Intel will introduce Silverthorne, and beyond that an x86 processor called Moorestown for low-power devices like MIDs. There's no evidence at all that people want MIDs right now, but Otellini thinks that if Intel continues to reduce the power consumption of its chips, the designs and software for MIDs will continue to improve.

Those devices will have to connect to the Internet somehow to compete against smart phones that use cellular networks for voice and data. And Intel thinks that network will be WiMax. The company is working with Sprint and Clearwire to get WiMax service going in the U.S., and it will hit Japan with WiMax as part of its joint venture with KDDI.

So that's what Otellini said. As always, it's interesting to note what he didn't say. He didn't mention Microsoft once during his presentation, at least that I noticed. He didn't mention Viiv or any of Intel's previous efforts to develop PCs for the living room. And Itanium seems to have finally crawled offstage, at least as far as the CEO is concerned. Keynote speeches later today from Pat Gelsinger and tomorrow from Dadi Perlmutter and Anand Chandrasekher might clear up some of those questions, but it's always interesting to see what the CEO's priorities are during one of his biggest speeches of the year.

Stay tuned for more coverage of IDF, including a talk later today with Intel co-founder Gordon Moore, and much more on the future of mobile devices tomorrow.