Nokia, Intel Share Smart Phone Pie

Intel (INTC - Analyst Report) and Nokia (NOK - Snapshot Report) have joined hands to tap the smart phone and MID market. Nokia will use the Atom processor in its smart phones and mobile Internet devices going forward, even as Intel licenses Nokia's 3G HSPA modem technology.

The two companies have used open source software from Linux to develop their respective mobile platforms. The strategic relationship is expected to enable Intel's Moblin (currently in beta stage) and Nokia's Maemo to incorporate several open source applications, such as oFono, ConnMan, Mozilla, X.Org, BlueZ, D-BUS, Tracker, GStreamer and PulseAudio through some co-coordinated effort. The association will also enhance device functionality for both in terms of Internet connectivity, wireless communication, superior graphics and comprehensive multimedia capabilities.

Nokia currently holds about 40% share of the mobile phone market and a 34% market share in smart phones. The partnership should, therefore, be of great strategic importance for Intel. Additionally, Intel's long-range plans of entering the mobile phone market will obtain further impetus from the licensed modem technology.

Intel has a comprehensive mobile roadmap, with Moorestown closely designed to follow Atom later this year, and then Medfield by early 2010. Power efficiency is expected to improve with each successive platform. We expect the Wind River acquisition to play a key role in the company's mobile plans.

Although it is still too early, the collaboration could be bad news for companies like Qualcomm (QCOM - Analyst Report) and ARM, who have been shipping processors to Nokia. The Maemo is still under development, but enhancements could put up stiff competition for the Android operating system developed by Google (GOOG - Analyst Report), or the blackberry which uses QCOM chipsets and ARM processors) developed by Research In Motion (RIMM - Analyst Report), or even the iphone developed by Apple (AAPL - Analyst Report).