Intel Takes On Qualcomm With Rival Standard for Devices

Intel Corp. (INTC) rejected an attempt by rival chipmaker Qualcomm Inc. (QCOM) to set technological standards for the next generation of connected electronic devices, instead signing up companies for a competing specification.

Intel today said it is setting up the Open Interconnect Consortium, with the backing of Samsung Electronics Co., Dell Inc. and Broadcom Corp. Last week, Microsoft Corp. said it joined Qualcomm’s group, the AllSeen Alliance, following companies such as Cisco Systems Inc.

Risking a repeat of technology’s most famous compatibility failures -- including Sony Corp.’s promotion of the Betamax home-video standard against JVC’s VHS in the 1970s -- the two chipmakers are vying to set the communication standards for the Internet of Things, the booming market for everyday devices that can communicate with each other and connect to the Web.

Both sides agree that without standards, it will take longer to reach a point where consumers can use their smartphones to remotely control their refrigerators, for example, or to use their computers to power up their air-conditioning units or to send data to their utility providers. Neither company is that impressed with its rival’s approach.

“We’ve looked at what’s out there today,” said Doug Fisher, head of Intel’s software business. “Certainly if those met the needs of us and others we would have participated there. Based on what we understand, that’s not the right approach. We’re going to continue down this path.”

Four Years

Qualcomm, which has been working on its open-source standard for four years, said it hasn’t heard from Intel and would be happy to discuss working together to incorporate its efforts. The San Diego-based company is concerned the competing groups will cause confusion among consumers and developers deciding which standard to support in their devices, said Rob Chandhok, senior vice president at Qualcomm and president of the company’s interactive platforms division.

“I’m a little puzzled,” he said. “I don’t understand how we couldn’t have solved this within the existing alliance and framework rather than saying we have a completely different approach and fragment the market, because I don’t think that will be best for consumer and businesses.”

Intel, whose processors run more than 80 percent of the world’s computers, has lost billions of dollars in its business unit aimed at breaking Qualcomm’s grip on mobile-phone chips. More than 90 percent of smartphones that currently run on the fastest phone networks contain combined Qualcomm processors and communications chips. At the same time, Qualcomm hasn’t yet fielded processors that have hurt Intel’s dominance in computing.

Devices using the Intel-sponsored standard will start to appear next year, Fisher said. The Santa Clara, California-based company projects that the market will reach the billions of devices.

To contact the reporters on this story: Dina Bass in Seattle at dbass2@bloomberg.net; Ian King in San Francisco at ianking@bloomberg.net

To contact the editors responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net Jillian Ward

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