November 28, 2000 4:41 PM PT
The cell phone of the future may have Intel inside.
Next week, top officials from Intel Corp. and Analog Devices Inc. are expected to announce that they've finished designing their jointly developed digital signal processor (DSP) and are ready to begin production.
Analysts say Intel's intentions are fairly clear: The new DSP advances the company's recent efforts to gain a foothold in the communications market.
"Intel needs a DSP if it's going to get serious about wireless," said Martin Reynolds, research fellow at Dataquest Inc. "It gives them one of the pieces they need."
DSPs, which translate analog signals into digital signals, are used in cell phones and a wide range of other consumer devices. Ordinary microprocessors, such as Intel's Pentium III, serve as computing engines by executing instructions needed to run applications.
When Intel (Nasdaq: INTC) and Analog Devices announced the joint project in early February, they said they planned to create a high-performance DSP that also conserved power. It would be able to handle video, voice, and data for embedded communication and computing-device manufacturers.
Intel's new groove At next week's announcement, Intel officials will likely claim that the DSP is the final hardware building block in the company's "Personal Internet Client Architecture." That architecture already includes Intel's XScale processor, flash memory, and cellular chip set technologies.
Analysts say Intel has a lot to gain from the effort, strategically as well as financially. With a DSP architecture, Intel can help to influence the agenda of the communications market in much the same way it influences the PC market.
For Intel, the single biggest opportunity for the new DSP lies in the cellular phone handset market. Analysts project that the market will grow, over the next five years, to a billion units or more annually.
"Intel sees this one-billion-unit market, and it wants to be a part of it," Reynolds said.
The DSP could also find its way into a host of other consumer devices, including DSL (digital subscriber line) modems, high-definition televisions, MP3 players, set-top boxes, and LCD projectors.
A tough market Intel won't be able to waltz in and claim a share of the competitive DSP market, however.
Earlier this month, Texas Instruments Inc., announced two new additions to its TMS3205000 line of DSP chips. TI (NYSE: TXN) claims its new chips, scheduled to ship in April 2001, increase performance by 60 percent and also reduce power consumption.
TI is considered one of the leaders in the DSP market, which also includes Lucent Technologies Inc. (NYSE: LU), Conexant Systems Inc., and Motorola Inc. (NYSE: MOT). None of them is likely to willingly cede ground to Intel.
"TI is a very formidable competitor, as is Motorola, but Intel's never been afraid of competition," Reynolds said.
"There's always room in the market," he said. "If the (Intel/Analog Devices) technology gives cellular handset makers an advantage in the market, or the price is right, they will use it."
On the other hand, "If this doesn't go anywhere, Intel's not going to cry either," Reynolds said.
Intel and Analog Devices have scheduled a joint announcement next Tuesday in New York, where they're expected to discuss plans for shipping the new DSP and how each company plans to use it. Intel spokesman Dan Francisco confirmed that the two companies plan to make a DSP announcement by the end of the year, but he declined to be more specific
