Intel has decided that it will get into the market for Mobile Internet Devices in a move that will place it up against smartphones and mobile operating systems makers.

The chips are going to be based on Linux software called  Moblin 2 which will be in developers hands by March and will power what Intel is promising is a new class of "mobile Internet devices."

Quite what Intel has in mind has got analysts wondering.  HD video on the go, IP phone calls, downloadable directions have all been suggested, but can be managed with existing technology.

For Intel to do anything thing in this space it has to be better than the Iphone, Palm and the Google phone. The other problem is that releasing such technology will almost certainly miff its partners such as Microsoft and Apple, so from Intel's perspective it would have to be worth it.  In fact Intel has said that it will announce new partnerships on the project soon.

It is possible that Intel is planning to release a cut price smart phone which will knock the wind out of more expensive models which are only cheap due to teleco supply deals. 

Gordon Haff, an analyst at market researcher Illuminata told Business Week that Intel would like to promote the MID category at the expense of high-end smartphones. He said that the fight over which companies will supply the chips and software for smaller and more powerful handheld computers such as MIDs is as a result of the slump in worldwide PC sales. X