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How Intel Gets Inside

The method behind Intel Capital's seemingly scattergun approach to investing in wireless startups has one cohesive aim: to create a groundswell of support for Intel's chips across the entire spectrum of the mobile market -- from devices and wireless LAN networking, to developers working on wireless applications.

While gallivanting 'round in Cannes recently, your Unstrung correspondent met someone from a company that has been a recipient of Intel's riches. He was happy to tell us all about the reasoning behind the silicon supremo's wireless investments. Naturally, the cash for wireless startups comes with strings attached.

Here's Intel's M.O.:

1) Find a wireless company with a promising technology, be it a Bluetooth chip (Cambridge Silicon Radio plc (CSR)), an enterprise-oriented wireless LAN hotspot network (iPass Inc.), or funky mobile applications (Jamdat Mobile Inc.). 2) Make a "strategic" investment of $10 million or less in said company. For extra bonus points, seat an Intel person on the board. 3) Have the grateful startup guarantee that everything it does will work with Intel "platforms." If you're developing an application, that means doing the code-work on servers with Intel inside (TM), says our source. "Otherwise people would be using Sun [Unix servers]," he asserts. For iPass, this means "optimizing" their WLAN client software to run well on laptops using Intel's forthcoming "Centrino" 802.11 gear (see Intel & iPass Connect). [Ed. note: Does this mean the network won't work as well with other chips?]

Obviously Intel has a stronger focus on some areas of the mobile market, hence the recent announcement that it will invest $150 million in wireless LAN startups this year (see Intel's WiFi Wad). However, the overall aim is ensure that Intel dominates wireless in the same way they dominate the desktop silicon market. "It's cheaper than an ad campaign," quipped Our Man in Cannes.

"I don't think that it's something Intel is formally saying," says IDC analyst Ken Furer. "But I wouldn't be surprised if that's part of what they're after."

He points to the way that Intel is trying to build a brand around its Centrino WLAN chipset. "It's like Centrino inside," he says. "They're trying to make it like Windows, so a software developer knows they have to write to it." For its part, Intel does say that it is a strategic investor and has deliberately invested in certain market sectors it is heavily involved in as a way to stimulate their growth. For instance, a company spokeswoman says, the Intel 64 fund was specifically set up to spur adoption of the company's heavy-duty server chips.

However, the spokeswoman says there is no specific agenda for wireless at Intel: "There's a different agreement with every company we invest in."

— Dan Jones, Senior Editor, Unstrung
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