Intel’s Atom gets 2 phone customers, but that’s not enough

Intel(s intc) promised 2012 would be the year its Atom processors would make it into smartphones, and at CES this week, it delivered on the letter of that promise. Motorola Mobility (s MMI) and Lenovo have agreed to embed Intel’s Medfield applications chips into forthcoming phones. But for Intel to call Atom a success, it needs to make headway with the big handset makers, which may be an impossibility considering how closely the major players in mobile devices are tied to the competing ARM (s armh) platform.

Motorola CEO Sanjay Jha said his company has a multi-year, multi-device deal with Intel, which could mean its moving away from the Texas Instruments (s TXN) and Nvidia (s NVDA) ARM-based chips. Jha said its first Intel-based Android(s GOOG) phones will launch in the second half of 2012, but it will eventually have embedded Atom chips in tablets as well. Meanwhile, Lenovo’s initial commitment to Atom is more limited. It revealed it would launch a single Android phone, the K800, in China in the second quarter.

While Intel is looking to score wins for Atom wherever it can, Motorola and Lenovo aren’t exactly the top tier. Motorola’s fortunes have plummeted in recent years, knocking it into the bottom rungs of the handset ladder. Google (s goog) may attempt to revive Moto after its acquisition closes, but it’s just as likely it will merely harvest the once-great phone innovator’s trove of patents. Meanwhile, Lenovo’s troubles in the wireless space are too numerous to count. After selling off, then repurchasing, its mobile business in 2009, Lenovo has refocused its efforts on smartphones and tablets, but it’s hardly a household name in mobile devices.

Apple (s aapl) and Samsung have become the dominant players in smartphones; their iPhone a Galaxy brands battling it out for global dominance. Both produce their own ARM applications processor silicon and would have little use for Intel. Apple did move away from ARM PowerPC for the Mac, adopting Intel CPUs, so there is some precedence for change. The difference is that Intel was and still is the dominant player in PC processing, while ARM bears that title in mobile.

Intel's mobile phone reference design.

Below Samsung and Apple lies a second tier of other smartphone makers that could be candidates for Intel chips, with Nokia, (s nok) LG and HTC among them. But as Om pointed out on Tuesday, all those handset makers could soon become non-factors. In fact, Om predicts that if anyone is going to challenge Samsung and Apple’s dominance, it will be Lenovo’s fellow Chinese vendors Huawei and ZTE, which could become giants in the low end of the smartphone price spectrum.

To land any of those guys, Intel needs to overcome the negative perceptions of Atom’s X86 architecture that it gulps down battery power, though Intel claims with the latest Atom release, the Z2460, those problems are solved. In addition, any vendor switching from an ARM-based architecture would need to deal with a massive fragmentation problem in Android. The two architectures’ differing instruction sets would require Android apps built exclusively for ARM to be recompiled for an X86 device. In an interview with the Verge, however, Intel’s Dave Whalen tried to assuage some of those concerns, saying almost all apps in the Android market will run on Atom-powered phones will run as is, with no recompiling necessary.

Still, there’s a big difference between “almost” and “all.” Not many device makers are going to take a big chance on Intel if the resulting handsets and tablets won’t have the full Android Market available to them. There’s already enough fragmentation with Android, and if forced to choose, developers will optimize their apps for ARM-based devices considering the huge numbers already available. As has always been the case in mobile, the cards are very much stacked against Intel.