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France Telecom Shows Orange-Branded Handset With Intel Chip

By Ian King
February 27, 2012 4:38 PM EST
France Telecom Preps Orange-Branded Smartphone With Intel
France Telecom Preps Orange-Branded Smartphone With Intel

France Telecom SA (FTE)’s Orange unit will begin selling a smartphone based on an Intel Corp. (INTC) processor this year, helping the chipmaker in its decade-long attempt to break into the mobile-device market.

The phone will be showcased this week at the Mobile World Congress in Barcelona, and go on sale in the summer in France and the U.K., the companies said. The Orange-branded device is designed by Intel and runs on Google Inc. (GOOG)’s Android software.

With the French Telecom deal, Intel is building on an announcement in January that Motorola Mobility Holdings Inc. (MMI) and Lenovo Group Ltd. (992) will start using its processors in smartphones this year. France Telecom, that nation’s largest phone company, said it wants a high performing phone under its Orange brand to encourage more use of mobile Internet services.

“We are very happy about the way it came out,” Patrick Remy, vice president of devices for France Telecom’s Orange business, said in an interview. “We really wanted to bring in this high-performance, high-speed element.”

Remy said the phone will be offered at a price that appeals to those who can afford entry-level phone plans, helping the Paris-based company target the 50 percent of its customers who don’t use a smartphone. Pricing and the name of the device will be announced when it goes on sale, he said.

Other Partnerships

In a presentation by Chief Executive Officer Paul Otellini today at the mobile-industry conference, Intel also said China’s ZTE Corp. (763) will begin selling phones and tablet computers based on the U.S. company’s processors. The first Intel-based smartphone from ZTE will come to market in the second half of the year. In India, Lava International Ltd. will also begin using Intel products to make smartphones for what Otellini described as the fastest-growing large market for the devices.

In another partnership, Intel announced that Visa Inc. (V) has certified Intel’s reference design -- the basis of its new mobile customers’ products -- to work with Visa’s phone-based transaction systems. The two companies will begin a multiyear accord, Visa President John Partridge said.

Smartphone Shift

Intel rose 23 percent in the past 12 months of New York trading, outpacing a 3 percent gain in the Standard & Poor’s 500 Index. France Telecom dropped 27 percent as the European government-debt crisis contributed to declining earnings.

France Telecom slipped less than 1 percent today to 11.72 euros at on the Paris exchange. Intel rose 0.7 percent to $26.89 at the close in New York.

Orange is aiming to increase the portion of phones it sells that carry its brand. ZTE, Huawei Technologies Co., Alcatel- Lucent (ALU) and Gigabyte Technology Co. (2376) build devices for the company that are sold under the Orange name. The goal is to have those phones comprise 20 percent of the total in 2012, up from 15 percent last year.

The phone company faces declining profit in Europe, where revenues are stalling amid competition. Selling a self-branded phone may help Orange limit the subsidies it has to pay to market Apple Inc. (AAPL)’s iPhone and other smartphones to customers at cheaper prices.

Orange, which also markets a multimedia tablet of its own brand, would consider extending its partnership with Intel into other products, Remy said.

‘Big Deal’

The market for mobile-phone chips will rise 40 percent to $29.9 billion by 2015, according to Mountain View, California- based Linley Group. Handset chips are outpacing the personal- computer processor industry, where Santa Clara, California-based Intel controls more than 80 percent of sales, according to Cave Creek, Arizona-based Mercury Research.

The new Orange handset is based on an Intel smartphone reference design built around a version of its Atom processor. The device will carry the “Intel Inside” label. Orange, the first mobile operator to use Intel chips for phones, is getting an exclusive, according to the chipmaker. Intel has previously announced deals with Nokia Oyj (NOK1V) and LG Electronics Inc. (066570) that didn’t result in phones going on sale.

“It’s a really big deal for us,” said Mike Bell, vice president and general manager of Intel’s Mobile and Communications Group. “We certainly don’t plan for this to be a one-off.”

Qualcomm Inc. (QCOM), the largest maker of communications chips that run phones, is fighting Samsung Electronics Co. (005930), Texas Instruments Inc. (TXN) and Nvidia Corp. (NVDA) for leadership of the market for processors that run programs on the phones. There are no phones now on sale that use Intel applications processors.

To contact the reporters on this story: Ian King in San Francisco at ianking@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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