Otellini: Nokia news made me swear like Yahoo's CEO

IDG News Service - When Intel CEO Paul Otellini received a call from Nokia chief Stephen Elop about Nokia's move to Microsoft, he used a word that Yahoo CEO Carol Bartz "has often used."

Otellini's reference to Bartz's reputation for swearing elicited a hearty laugh from an audience gathered to hear him and others in a panel debate at the Mobile World Congress on Wednesday. The other panelists were Bartz, Cisco Systems CEO John Chambers and Softbank CEO Masayoshi Son.

Nokia said last week that it will drop both its own Symbian operating system and also the Linux-based Meego OS it began co-developing with Intel a year ago. Instead, it said, it will build smartphones using Microsoft's Windows Phone OS.

Otellini, asked about his reaction to Elop's announcement, said: "I understood why they did it. I guess if I was in his position I would have made the same or a similar call."The move follows a long-running trend in the PC industry, Otellini said. "You're seeing the last fully integrated phone manufacturer become more horizontal, exactly what we saw in the PC model where people focus on what they're good at -- chips or software or distribution," he said.

But the net result of Nokia's move will be more innovation, competition and players over time, Otellini said.

Still, Nokia's defection isn't great for Intel in the short term. The chip maker has been trying to move into the growing smartphone and tablet market, which are both dominated by processors designed by ARM. Intel said on Monday that its low-end smartphone chip, called Medfield, is in production and will ship later this year.

Producing chips is one thing, but getting phone manufacturers to use them is another. Otellini reiterated that Intel will have processors in smartphones later this year, marking the chip maker's first entry into a growing market from which it has been noticeably absent. He declined to say who will use the chips, but said, "I think it's going to be pretty exciting."

Otellini said Intel also plans to make an announcement soon about moving chip production to the 22-nanometer manufacturing process. That will allow Intel to make speedier and more power-efficient chips as it looks to push its Atom processors into the tablet and smartphone markets.

Such a move will be important for the company: Sales of smartphones have surpassed PC shipments, and the tablet category "has come out of nowhere and commanded the attention of the industry," Otellini said.

Notebook computers continue to be the main driver, though, with 25% growth last year and expectations of 20% growth this year. PC sales grew 17%, with more than a million units sold per day for the first time ever, he said.

"I don't see any environment developing any time soon where one machine satisfies all your needs," Otellini said. "But I think at least for the next for four to five years, we are likely to see multiple devices, multiple form factors simply because people want to do different things with computers.

"And in this world, no one device wins," Otellini said.