Intel Puts Its Money on Wireless Internet

Betting that demand for mobile Internet access will help drive sales of chips for laptop computers, Intel Corp. said Monday that it will boost investment in wireless start-ups substantially over the next several years.

The world’s largest semiconductor company is seeding the market for its newest laptop chip, to be released early next year. Code-named Banias, the chip will have built-in ability to tap into wireless networks.

By increasing its investments in outside companies to $150 million from $25 million, Intel hopes to promote a more robust wireless infrastructure that will support its next generation of products.

“The goal is to have anytime, anywhere computing,” said Sriram Viswanathan, managing director of broadband and wireless networking for Intel Capital, Santa Clara, Calif.-based Intel’s venture capital investment arm.

With desktop sales slowing, Intel is turning to the laptop market for growth. Although U.S. desktop shipments are forecast to fall 3.7% in volume this year, laptop shipments are expected to grow 14.6%, according to technology research firm IDC.

“The real opportunities for Intel are in notebooks,” said Alan Promisel, an IDC analyst. “So it’s in their best interest to promote wireless Internet as much as possible in order to help drive mobile processor shipments.”

Wireless networks, while still nascent, are starting to roll out in hotels, airports and restaurants. Starbucks Corp., for example, sells wireless service at more than 1,000 of its shops for $29.99 a month, or $2.99 for 15 minutes.

The service uses a technology called Wi-Fi, which allows users to connect wirelessly to a high-speed access point.

But the networks, called “hot spots,” are far from ubiquitous, and most people are unclear about how the service works.

“It’ll be three to five years before we can expect mainstream consumers to access the Internet this way,” said Charles Golvin, senior analyst for Forrester Research Inc. in Cambridge, Mass. “One of the biggest impediments is that there aren’t too many people running around with devices with Wi-Fi capabilities. Another barrier is the pricing. With service running up to $70 a month, it’s just priced beyond what average consumers are willing to pay.”

Another hurdle is billing. With thousands of independently operated hot spots, laptop owners face multiple bills for access. Several firms, including Boingo Wireless Inc. and IPass Inc., seek to solve that problem by consolidating hot spots so that users receive a single bill.

Intel, which has invested more than $4 billion in the last decade through Intel Capital to further the company’s overall strategic goals, plans to fund small companies that help solve these issues and speed up consumer adoption of wireless Internet access.

Intel shares closed up 99 cents to $15.45 on Nasdaq.