Intel, Nokia work on new pocket computer project

The deal is significant for Intel because it will help the world's biggest maker of PC microprocessors penetrate the smart phone market, an area Intel sees as crucial for growth.

Intel now makes smaller, lower-power chips for devices like "netbooks" - stripped-down laptops that do less and cost less. The company wants its chips used in other devices that act as computers, like smart phones made by Nokia.

Nokia gets Intel's agreement to license modem technology from Nokia and build it into future Intel chips.

The companies said in a joint release that they will also collaborate extensively on research projects, including improving the operating software for mobile devices. Any breakthroughs there should make the gadgets more attractive to consumers, which would sell more Nokia phones, presumably with Intel chips inside them.

The companies already collaborate on research projects, but Tuesday's announcement signals their intention to build products together. No specific products were announced.

"The possibilities are endless," Anand Chandrasekher, Intel's ultra mobility group general manager, said in a statement.

The companies said they would collaborate on improving so-called "open-source" software for mobile devices. Open-source software is code that's distributed freely on the Internet so programmers can modify and improve it on their own.

Kai Oistamo, Nokia's executive vice president of devices, said the deal represents a significant commitment between the two companies to work together on the future of mobile computing.

"We will explore new ideas in designs, materials and displays that will go far beyond devices and services on the market today," Oistamo said.

Shares in Santa Clara, Calif.-based Intel were up 13 cents to close Tuesday at $15.81. Nokia, based in Espoo, Finland, rose 38 cents, or 2.7 percent, to $14.46.

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