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"As hand-held and embedded computing devices become more powerful and as wireless connectivity becomes more pervasive, small form-factor devices will affect every aspect of our lives." 
This prophesy was made by Intel (INTC) in a recent white paper, and the explosion of the recently introduced iPhone with its PC-esque functionality seems to support the notion that small form-factor devices will continue to grow in usefulness and popularity. A huge factor in the convenience of a portable device is how long it can run after being fully charged. Many industries, i.e. semiconductor, electrical components, battery manufacturers, etc., are deeply invested in improving the run-time of these devices by creating low power technologies like chips that optimize performance, longer lasting batteries, and low power-consuming system components.
The race for lower power usage in handsets will be fought at the chip, component, and system level (see "Drivers" section). Winners in this race will be those in each of these three levels who both stay on the cutting edge of low power technology and develop the relationships necessary to put their technologies in handsets.
Texas Instruments (TXN), STMicroelectronics N.V. (STM), and QUALCOMM (QCOM) are some of the top handset chipmakers. They stand to gain as device manufacturers look for "smarter" chips that can control power consumption in newer multi-function handsets like the IPhone, which are growing in demand. The more applications on a handset--i.e., MP3 player, phone, small computer--the more challenging it is to make sure that they all don't consume too much power and shorten battery life. Chips that control the power usage in multi-function handsets have been the most effective at improving overall device run-times.
Apple (AAPL) is emerging as another main competitor in the handset market, and the design of the iPhone, although it has so many functions, seems to maintain adequate battery life. Although handset manufacturers often rely on chipsets to lower battery consumption, they too have to continue advancing low power technologies from a total systems level (see "systems level power management" in "Drivers" section). Other handset competitors like Nokia (NOK) and Motorola (MOT), if they want to compete with the iPhone, must also design handsets that can run many applications without rapidly draining battery power.
SanDisk (SNDK) provides flash memory, a lower-power type of memory, for consumer electronics devices. Due to the convergence of MP3 players and mobile phones, they stand to sell a lot more memory with increasing 3G handset sales.
Hand-held devices are composed of electrical components, which in turn are generally composed of chipsets made from semiconductors. All of these building blocks and the system itself, when coordinating the functions of its many components, consume power. The chart at the right shows the many different components built into hand-held devices that use power, including bright displays, hard drives, radio antennas, and applications like playing music. The drivers of increasing battery life are advances made in conserving energy from the basic silicon to the overall system level.
The basic chips that run electrical components within handhelds are getting smaller and faster, mainly because chipmakers are coming up with ways to put more silicon transistors on each chip. Unfortunately, the higher the transistor density on a chip, the more power it consumes and heat it generates (which can cause power leakage). Chipmakers are constantly looking for ways to optimize chip microarchitectures to minimize power usage and heat generation, and are generally the most innovative when it comes to creating low power technologies. They often work with component and handset manufacturers to integrate these technologies up the value chain. Innovations in chip microarchitectures that lead to power optimization will separate the winners from the losers in the handheld semiconductor industry.
In general, outside of embedded chips, the hard drive and display are the main power consumers. Companies that reduce the power used by these two components will get noticed by device manufacturers looking for low power components. Unfortunately, non-chip component margins are still squeezed by handset price competition, and thus improvements in power efficiency won't necessarily translate into higher profits.
Device manufacturers have the most to lose if their systems have short battery lives, because they compete directly for consumer dollars. They are constantly looking for ways to optimize the efficiency of system applications while in use and intelligently power down others that are idle. Given that demand is expected to increase for 3G phones which offer more complications in power management, those companies that manage battery life better than others should see an advantage in sales.
Lithium-ion batteries are generally used in most handsets and laptops. Although the limitations of these batteries are well known and thus low power technologies are built with these limitations in mind, new breakthroughs in battery technology could transform the handset industry.