Will Intel loosen ARM's grip on the tablet market?

Earlier this month, chip giant Intel officially launched its Atom 'Oak Trail' processor platform, specifically targeting the booming tablet market. Well, good luck with that, I say, because Intel will need it. The current king in tablet and smartphone chipset design is one of the UK’s leading tech firms, ARM.

ARM don't manufacture chipsets, they design them, and they're very good at it. In fact, at Microsoft's MIX conference in Las Vegas earlier this month Internet Explorer 10 was demoed on a 1GHz ARM-based system.

If Microsoft is looking at ARM seriously, then Intel has big problems. As well as being behind in the hardware side of the tablet market, Intel looks to be far behind in the software side too. Intel is pushing the MeeGo operating system as its preferred tablet system, but looks to be far behind the likes of Android, Chrome OS and Windows.

Of course, Intel has deep pockets, but I do tend to feel that the $7.7bn it splashed our for security vendor McAfee would have been better spent taking over ARM. But that rumour, which surfaced last September, was kicked into touch by ARM’s chief exec.

A quick check on ARM Holdings share price sees it close to £6.00 per share boosted by that tie-up with Microsoft. The share price seems consistently high, with some industry experts citing the firm being pursued by a bidder awash with cash as the reason. Well, according to Bloomberg last month, any suitor would need to be because it valued ARM at more than $11bn.

Could Intel's Oak Trail chipset succeed in the tablet market? A lot of people would be surprised if it did, given their earlier efforts in the mobile chip market ended ignominiously when Marvell Technology Group acquired its communications and application chip business for about $600m in 2006. But today is different, with analyst firm Gartner estimating the number of consumer mobile devices now stands at 1.6 billion.

Intel knows it has a challenge, and it will be interesting to see how this market goes over the next four years.