AMD, Intel Rivalry Moves to Hand-Held Market

SAN FRANCISCO -- After a quarter-century of fighting for control of the PC, Intel(INTC Quote - Cramer on INTC - Stock Picks) and Advanced Micro Devices(AMD Quote - Cramer on AMD - Stock Picks) are massing their forces on a new battleground.

The rival chipmakers are busily deploying engineering resources and making strategic investments to claim a piece of the market for handheld electronic gadgets.

In recent months, both have detailed plans to build energy-efficient microprocessors specially designed for portable electronic devices.

The catch is that a mass-market for these devices is still largely nonexistent. But with the frenzy over Apple's(AAPL Quote - Cramer on AAPL - Stock Picks) iPhone, the chipmakers are keen to secure a central role in a class of product that some believe could soon rival the PC.

"These devices, in each iteration, get more and more useful," says Michael Gartenberg, director of research at Jupiter Research, adding that the products have already evolved from being expensive toys for tech enthusiasts to viable business productivity tools.

Within the next three to five years, Gartenberg believes that consumers and business users will carry around an Internet-connected handheld device, similar to the way that consumers have adopted notebook PCs in addition to desktops.

"It's not something that necessarily replaces the desktop or notebook. It's really allowing for the emergence of a new class of device with overlapping functions," says Gartenberg.

As it is, today's crop of handheld products, generically referred to as mobile Internet devices and ultra mobile PCs, suffer from sitting in the awkward, undefined space between cell-phone handsets and laptops.

The nascent class of products seems to encompass everything from high-end cell phones and blackberry-like devices to machines that resemble shrunken versions of standard notebook PCs.

And the prices are still forbidding.

The iPhone has taken some heat for its $500 to $600 price tag. The OQO, one of the current ultra mobile PCs available, has a price tag between $1,500 and $1,850, depending on the configuration.

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