Nokia/Intel flip-flop

In June of last year I wrote a piece about the deal between Intel and Nokia. At the time, I wrote that the announcement was probably more about Netbooks than smartphones, and that the real winner might have been Intel because they could obtain 3G chipset IP on license from Nokia.

Times have moved on, and there was a Nokia netbook announced, and there was no smartphone.

The main thing to come out of the deal was the merging of two failed linux distributions: Nokia's Maemo and Intel's Moblin have merged to make Meego. I don't know what the name means, but presumably the inclusion of the word "go" as part of the name is some way to suggest it as a portable OS.

However, I then noticed the other day that Nokia sold it's entire 3G chipset business to Renesas in a shock move whose implications are still not clear. In the pleasantries of the press release, Nokia and Renesas will be collaborating on future HSPA+/LTE chipsets (a continuation of a past collaboration), but all of the employees in that division will transfer entirely under Renesas.

So this is a firesale of an asset that Nokia on the one hand can do without (they can source 3G chipsets competitively on the open market), but on the other hand they can make obvious symbiotic use of in their handset business.

Is Nokia's market share dipping below the point where it makes sense to have 3G in-house? Is it not possible any more to amortize the cost of that R&D across other parts of the business and still make a profit?

Back onto the original subject of Nokia and Intel, what does this mean for Intel's sourcing of 3G components now? The original deal was to include Intel putting a respirator around the nose and lips of Nokia's 3G business - has this fallen through?

If Intel's traction in smartphones keeps looking as limp as it currently does, there's little demand for this notional part of the deal, and Intel may be forced into sourcing parts from the open market, instead of having a two way love fest with the Finnish giant.