Get ready for more power in your pocket

It may take a while, but in a few years, it's likely that we'll have devices in our pockets that are so powerful that today's smartphones and computers will pale in comparison. At least that's the promise of the just- announced collaboration between Santa Clara, Calif.-based Intel (INTC) and the Finnish Nokia (NOK).

The news that the two companies will work together is a breakthrough for Intel, which dominates the market for chips used in computers. Intel has been trying to break into the cellphone market but has consistently failed because its chips required too much power. So the company focused instead on creating a market for pocket-sized products. Now, with Nokia agreeing to use its chips, it looks like a winning strategy.

By collaborating with the world's largest developer of wireless handsets, Intel now has access to Nokia's baseband modem technology, allowing it to bring its own architecture to mobile in order to develop processors for Nokia's wireless app processor platforms. It will also allow Intel to license Nokia's 3G/HSPA modem technology. Both companies will be working to develop common technologies for Intel's Moblin and Nokia's Maemo Linux-based operating systems. Moblin will be used in netbooks and mobile internet devices, while Maemo is aimed at the operating system that Nokia used for its N800-series.

For Nokia, the collaboration provides a new avenue to come out with powerful new smartphones and netbooks, though it may take a couple of years.

But where there are winners there are also losers. Nokia has long had existing relationship with Texas Instruments (TXN) and ST Microelectronics, as well as Qualcomm (QCOM), as it started to develop CDMA-based handsets and Broadcom (BRCM). While Nokia says it will continue to work with these companies, Intel's entry now makes it tougher for the others as the company increasingly moves toward developing more sophisticated smart phones or mobile computers.

Of course, Intel is also taking a risk by working with Nokia because it needs to be careful not to anger its existing partners while helping Nokia to build new, impressive competitive devices.

It remains unclear exactly what kind of new products to expect from the collaboration, but Nokia did say that it plans to use new materials, shapes, and displays that go beyond anything available in today's smartphones and netbooks. This will be a growing and competitive market. Companies like Motorola (MOT), Samsung, and LG are going after the netbook market, and more traditional PC companies, such as Acer, Dell (DELL), and Hewlett Packard (HPQ), likely will be developing smartphone/smartbook devices over the next few months.

Soon, you'll be carrying around a completely newfangled device.

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