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Intel, Nokia Partner for Future Smartphones

Mobile phone giant Nokia said today it plans to use Intel's low-power Atom processors in future phones and mobile devices -- a move that could position the world's largest mobile phone maker for more advanced products while helping Intel better cash in on the smartphone craze.

The agreement may also prove to be good news for Linux, with new products from Nokia (NYSE: NOK) based on a mobile version of the open source operating system.

Nokia said it had committed to working with Intel (NASDAQ: INTC) on Moblin, an optimized version of Linux for Intel's Atom processor and designed for the small screens used by smartphones and mobile Internet devices (MIDs). Intel recently released a beta of version 2.0 of Moblin.

The two also firms will work together on Maemo, a Linux derivative created by Nokia and used in the Nokia N810 Internet Tablet.

In addition, Intel said it will license Nokia's HSPA/3G network technology through the arrangement.

"A key request we consistently hear from Internet users is they want rich experience any time, anywhere. This is a key opportunity to create exciting new experiences across a range of devices, including a next-generation platform we will be providing with Nokia," Anand Chandrasekher, senior vice president and general manager of the Ultra Mobility Group at Intel, said during a conference call to announce the partnership.

Beyond that, though, the two firms were short on specifics. They talked about developing Internet-connected devices such as netbooks and nettops but there were no plans laid out.

"Let's not get hung up on terms today," Kai Oistamo, executive vice president for devices at Nokia, said during the call. "We plan to turn our joint research into concrete action as well. We plan to create new categories of devices beyond today's smartphones, MIDs, notebooks, netbooks -- whatever you call them."

While nothing has come of the deal yet, it's a big break for Intel. This is its first foray into the mobile handset market, which may not have the margins of servers but sure has the volume. With almost 40 percent of the worldwide wireless phone market, Nokia ships about 100 million devices per quarter.

That could be bad news for cell phone chip vendors like Qualcomm and ARM, noted Nathan Brookwood, research fellow with Insight64.

"If there's anybody here who could be impacted [by the partnership], it would be Qualcomm and possibly ARM. Nokia has shipped a billion phones plus, and every one of them has an ARM processor in it. Now, Nokia is saying, 'Maybe we'll try these Atom processors,'" he told InternetNews.com.

In licensing Nokia's HSPA/3G modem technologies, Intel also plans to compliment its existing Wi-Fi and WiMAX efforts, according to Chandrasekher. "This will have no impact on WiMAX. This partnership expands wireless broadband by adding to it. We want to offer customers a powerful mobile experience," he said.

In-Stat Chief Technology Strategist Jim McGregor isn't quite as sold on the deal. "Why is it a big score? The two have worked together all they back to XScale and nothing came of it," he said in an e-mail to InternetNews.com.

"So, Intel licenses a cellular technology, are they going to duplicate their XScale efforts again? Will they finally get it right?" he said.

He added that it's good that these companies are working together and will both benefit, just that nothing has really changed yet.

"We will have to see if the to companies can work closer together and actually market a platform this time before it has a dramatic impact on the industry," McGregor said.