[symphonix]

The other thing to consider is that Intel also makes other chipsets including networking, wireless and video ... especially when it comes to fully integrated or "on-board" solutions. These are best suited to use in very small devices. Like iPods.

For years, iPodders have been asking for a video iPod, a BlueTooth and Airport Extreme enabled iPod, an iPod with web-browsing and chat capabilities, digital camera interfaces, and so on. With current hardware, most of these are just outside the realm of possibility. Devices like this can be made, but not cheaply, and there is a cost in terms of power consumption and size.

But with access to a chip-maker who specialises in low-end, integrated versions of these chipsets, Apple will be closer to creating this dream device.

There's no doubt that Apple see Sony's PSP as a real threat to iPod sales. Not only is it audio and video capable, but Sony have gone out of their way to make it compete with the iPod. The audio controls on the headphone cable show that Sony really intended to steal back some of the market back from Apple. Apple has to counter, therefore they have to work with Intel.