CES 2008: Intel Banks on Another Wireless Gadget

Intel is betting on a big expansion of “ultra-mobile” computing, an idea that could hinge on how many gadgets people are willing to tote around.

In an interview Monday at the International Consumer Electronics Show, Intel CEO Paul Otellini said energy-efficient, Web-connected computers with full keyboards and screens in the 4-inch neighborhood can give people more of what they want from the Internet than cell phones can.

To help stimulate the technology, Intel plans in the next few months to begin shipping processors and associated “chipsets” that demand relatively little power and are smaller than standard PC processors, allowing them to be crammed into tinier devices, which would be built by other companies.

Eyeing a similar market, wireless chip maker Qualcomm Inc. also has built prototypes of little Web devices. Its chief operating officer, Sanjay Jha, said he expects manufacturers to take up the blueprints and begin selling what he calls “pocketable computers” by the end of this year.

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So far, so-called ultra-mobile computers, smaller than average laptops but bigger and more fully featured than most cell phones, have gotten a tepid response.

With the devices’ prices often beyond $1,000, many potential buyers have found little reason to scale down from their notebook computers or up from cell phones that have been improving their Web browsing experience.

“How do you make people realize that this is something advantageous to them and different from the notebook experience?” said Richard Shim, an analyst with IDC, a market research firm. “That’s the trick. Nobody’s been very good at that yet. … It’s not as widely compelling as it needs to be if they want it to compete on the level of a phone or a PC.”

But Otellini said such distinctions will cease to matter, especially since small Web devices can incorporate cell phone functions. And he said Apple Inc.’s iPhone showed that combination devices can be elegant.

“You’re projecting an end stage on an early technology,” he said. “That’s a risky thing to do.”

To be sure, even with cell phones in nearly every pocket or purse, another gadget could be appealing if it does something particularly compelling. For example, more and more cell phones play music, but plenty of people also carry MP3 players that do the job better.

In a keynote speech Monday at CES, Otellini tried to show that ultra-mobile PCs - he prefers the name “mobile Internet devices” to better distinguish them from laptops - offer a new kind of information-on-the-go bliss.

He demonstrated how an American traveler to Beijing might use a pocket computer to get real-time navigation tips and instant translations of signs, menus and conversation from Chinese.

Otellini acknowledged that this vision for ultra-mobile computing might not be fully realized for a few years.

For one thing, little PCs need longer battery lives so people can tote them around and use them all day.

Intel also expects that wireless broadband networks based on the WiMax standard will develop much further to enable connectivity on the devices. But Otellini said the computers could also make use of cellular networks.

That is the connectivity route favored by Qualcomm, which is a major supplier to the wireless industry. Jha, the Qualcomm executive, said wireless carriers first will need to come up with more enticing data pricing plans.

Proof that wireless carriers will be crucial is in the weak reception for Sony Corp.’s Mylo handheld messaging device. Though it has a full keyboard and sells for around $300, it can go online only in Wi-Fi hot spots, which have limited range.

This is far from the first time Intel has ranged beyond its specialty in PC and server chips in an attempt to diversify - and take the edge off the up-and-down cycles common in the chip business. Past forays that hit dead ends include chips for music players, TVs and cell phones. Intel once even tried selling toy microscopes.

These days, some analysts fear Intel’s inventory for PC chips is backing up because of slowing orders from the industry. Intel’s shares fell 15 percent last week, vaporizing about $24 billion in shareholder wealth.

Intel also is eyeing home entertainment devices. Otellini introduced a computing-and-graphics-microprocessor combo that can run TVs and set-top boxes.

The company’s goal with that product, called Canmore and due out late this year, is to make it easier for people to move Internet content to high-definition TVs.

Otellini said neither that nor the mobile Internet device venture is a mere side project.

“We don’t make small bets on anything,” he said.