But they are vastly different companies. Intel’s stock market value is $141bn while ARM’s is under $4bn. The Cambridge, UK-based company may have licensed its technology to many of the world’s most important consumer electronics companies but it only earns a few cents in royalties on each device manufactured, whereas Intel has only AMD to contend with in demanding hefty prices for its latest processors.

When Intel looked to extend its influence into mobile devices, it was happy to license ARM technology and won contracts from high-profile customers such as BlackBerry-maker RIM. But though its revenue from the operation was believed to have reached $250m a year, Intel could not make money on the business.

In June 2006, Intel got out of the market when it sold the unit to Marvell Technology for $600m. It was turning its back on a market that in the wireless handset business alone tops over 1 billion units a year. But small devices were not forgotten and it was anxious to emphasize that it was developing new architecture silicon specifically for ultra mobile PCs.

However, what was once a clear dividing line between Intel and ARM may soon blur. Smart phones powered by ARM are sophisticated computing devices, while the boom area of the PC market has been in portable laptops, now downsizing to notebooks. Ahead is the world of the mobile internet device. Much of the impetus behind the roll-out of WiMAX networks is a belief that a host of new devices are about to come onto the market with online capabilities. Intel has championed this development with an investment in Clearwire, which is rolling out a national network in the US.

So will these devices be powered by Intel or ARM? Intel is rarely the kind of company to rubbish its competitors in public. But Sriram Viswanathan, a vice president at its venture arm Intel Capital, popped his head over the parapet recently in an interview with the Financial Times.

He said the ARM processor limits internet access such as unfettered viewing of YouTube videos. Instead, he was enthusiastic bringing the x86 world to smaller gadgets, and pointed to Intel’s ultra-low power, small form-factor Silverthorne chip. This prompted the FT to speculate as to whether a Silverthorne processor, due in 2008, would power a future generation of the iPhone.

At its developer forum in Beijing, Intel SVP Anand Chandrasekher, who is general manager of the Ultra Mobility Group, said the company was working with a range of leading industry players to establish the MID and ultra-mobile PC (UMPC) categories. He said Intel will deliver its next-generation platform for MIDs and UMPCs codenamed Menlow in the first half of 2008, based on the Silverthorne processor.

For its part, ARM appears unworried that Intel plans to move into its market. Bob Morris, director of platform solutions mobile computing at ARM, dismissed the suggestions of a limitation on viewing YouTube by saying that users of the iPhone are doing just that. He said what is important in a mobile device is what it is doing when it’s not doing anything. Years of working with the limitation of battery power has enabled ARM and its partners to develop all manner of techniques to extend the life of mobile devices.

So ARM can claim that it can produce a comparable performance to the Intel Stealey processor, which currently powers its mobile platform while using one-tenth of the power.

ARM began, like Intel, on the desktop with the long forgotten Acorn computers. But it was not just that it has taken a RISC route while Intel plumped for the CISC approach. It benefited early on from an investment from Apple, which was developing the Newton, a commercially unsuccessful device that was a pioneer of the PDA market. And although its latest processors are immensely complex beasts, the company argues that power saving became part of its philosophy in design.

No one can be sure what economies will be achieved by Intel with Silverthorne. The company has re-engineered its whole micro-architecture and power-saving has suddenly become as big an issue in the data center as in the portable device.

Our View

The next wave of MIDs will have profound implications for the whole industry. With weight-saving and low costs other important considerations, storage capacity will also be limited. Slim devices are what Google is aiming at with a growing range of hosted software.

What centers around Intel and ARM is a market development with big implications for Microsoft. The world of mobile devices will pose enormous questions for those brought up in the world of ever fatter programs driven by powerful processors on the desktop.