The company has come up with an iPhone-esque prototype of an Android device running its chip. More than just a concept device, though, the phone (pictured here) is a fully baked design that Intel is making freely available for phone makers to use in whole or in part.

“You’ll see a number of Intel customers using the guts of this phone to go into the market in the first half of next year,” CEO Paul Otellini said at a Credit Suisse investor conference last month. “And we’ll have more announcements of that at CES.”

Otellini is slated to give a keynote speech at the Las Vegas event on Jan. 10, so that would be a logical place for any news, though the company has also scheduled a notebook-related press conference for the prior day.

Technology Review posted a story on Tuesday, talking about Intel’s efforts and quoting Intel as saying the phones should hit the market in the first half of 2012. However, Otellini suggested in his Credit Suisse speech that Intel is aiming to have products out there sooner rather than later.

“We’ll be shipping in the first quarter of next year,” Otellini said.

Intel has previously talked about its plans for phones, and Android in particular, including at its September developer conference, when Otellini invited Android chief Andy Rubin on stage to talk about Google’s work to make Intel chips a first-class citizen for future Android releases.

The chip giant faces a host of competitors as it enters the space, including the current Android leaders — Qualcomm, Texas Instruments and Nvidia. Broadcom has also said it has designs on the market, particularly the low end, an area dominated by MediaTek.

Though cognizant of the competition, Intel has said its tests show its reference design as a solid competitor not just on performance, but also in the all-important area of battery life, where many have felt that Intel could not compete with ARM-based processors.

The move is about more than phones, though. Intel already faces steep competition from ARM and Apple in the tablet arena, and with Windows 8 it will also see challenges on the PC side of things.

Leading Intel’s effort are former Infineon executive Hermann Eul, and former Apple and Palm executive Mike Bell. The chipmaker recently reorganized its mobile efforts, putting the two executives in charge of all aspects of the project.

After years of talking about being in the smartphone processor game, it will be interesting to see if Intel can actually make some headway.

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The new heads of Intel’s Ultra Mobility Group are Mike Bell and Dave Whalen.

David Perlmutter, executive vice president and Intel Architecture Group general manager, said in a statement that Intel “remains committed” to the Atom business, which Intel calls its Ultra Mobility Group. “We continue to make the investments needed to ensure that the best user experience on smartphones and handhelds runs on Intel architecture, and to ship a phone this year.”

The fact is, however, that for all Intel’s efforts, Atom hasn’t gotten very far. While it’s been a favorite of the netbook set–the small form factor PCs that were so popular before Apple’s iPad showed up on the scene–the Atom chip has largely failed to even mount a challenge against chips based on the ARM architecture in tablets and smartphones. In fact, as we saw at the Consumer Electronics Show in January, the reverse is true. ARM-based chips are now aiming at traditional notebook-type devices running full versions of Windows.

“Avie and I worked closely together at Apple for many years and I have always admired his engineering talent and leadership, his strategic vision for how software can transform businesses and his ability to execute on that vision,” Elevation co-founder Fred Anderson said in a statement. “We are proud that he has decided to join Elevation and believe he will be a huge asset as we explore new investment opportunities.”

Indeed. Tevanian, who spent nearly a decade leading Apple’s software engineering efforts before leaving in 2006, came to the company from Steve Jobs’s Next Computer, where he helped build the NeXTSTEP operating system, an early precursor of the current Mac OS.

I can’t imagine that Apple (AAPL) is at all happy about Tevanian’s latest career choice.

By enlisting with Elevation, Tevanian joins a group of Palm-backing Apple alums that includes Palm (PALM) Chairman and CEO Jon Rubinstein, formerly Apple’s senior vice president of hardware engineering; Senior VP of Product Development Mike Bell, former SVP of product development at Apple; Senior Apple Designer Jeff Zwerner; VP of Public Relations Lynn Fox, who once headed up Mac PR for the Cupertino, Calif., company; and, of course, board member Fred Anderson, who served as Apple’s CFO from 1996 to 2004.

Image credit: Que Nerd

In August 2007, just after former Apple exec Jon Rubinstein joined Palm, Apple CEO Steve Jobs warned Palm CEO Ed Colligan against poaching his company’s employees. “We must do whatever we can to stop this,” he said, according to communications reviewed by Bloomberg. Colligan declined. “Your proposal that we agree that neither company will hire the other’s employees, regardless of the individual’s desires, is not only wrong, it is likely illegal,” he told the Apple CEO, noting–ironically–that Cupertino had hired away some two percent of Palm’s workforce as it began developing the iPhone.

And that’s proven a wise move. Today, the U.S. Department of Justice is investigating just such gentleman’s agreements as a collusive restraint on trade. And Palm (PALM) and Apple (AAPL) are sparring over intellectual property and the Pre handset, which Apple claims “falsely pretends to be an iPod.” How convenient for Palm that these communications should emerge now when its Cupertino rival is giving it such a hard time. And such a distraction for Apple legal….

Of course, Jobs was right to worry. Within a year of his warning to Colligan, Palm hired away Mike Bell and Lynn Fox, Apple VP of CPU software in the Macintosh hardware division and head of Mac PR respectively, among others hired later. And within two years, Palm debuted a new handset that some consider a worthy rival to the Apple iPhone.

In August 2007, just after former Apple exec Jon Rubinstein joined Palm, Apple CEO Steve Jobs warned Palm CEO Ed Colligan against poaching his company’s employees. “We must do whatever we can to stop this,” he said, according to communications reviewed by Bloomberg. Colligan declined. “Your proposal that we agree that neither company will hire the other’s employees, regardless of the individual’s desires, is not only wrong, it is likely illegal,” he told the Apple CEO, noting–ironically–that Cupertino had hired away some two percent of Palm’s workforce as it began developing the iPhone.

And that’s proven a wise move. Today, the U.S. Department of Justice is investigating just such gentleman’s agreements as a collusive restraint on trade. And Palm (PALM) and Apple (AAPL) are sparring over intellectual property and the Pre handset, which Apple claims “falsely pretends to be an iPod.” How convenient for Palm that these communications should emerge now when its Cupertino rival is giving it such a hard time. And such a distraction for Apple legal….

Of course, Jobs was right to worry. Within a year of his warning to Colligan, Palm hired away Mike Bell and Lynn Fox, Apple VP of CPU software in the Macintosh hardware division and head of Mac PR respectively, among others hired later. And within two years, Palm debuted a new handset that some consider a worthy rival to the Apple iPhone.

Jeff Zwerner, who did stints at Apple as both senior art director and creative director for packaging, has signed on at Palm (PALM) as senior vice president of brand design.

Zwerner joins Palm Chairman and CEO Jon Rubinstein, formerly Apple’s senior vice president of hardware engineering; Senior VP of Product Development Mike Bell, former SVP of product development at Apple (AAPL); VP of Public Relations Lynn Fox, who once headed up Mac PR for the Cupertino, Calif., company; and board member Fred Anderson, who served as Apple’s CFO from 1996 to 2004.

Quite a collection. And it doesn’t include rank-and-file employees who’ve train-hopped from Cupertino to Sunnyvale. Seems Palm’s makeover isn’t so much a reinvention as a reimagining of the company as a sort of paint-by-numbers version of Apple.

We’ve learned and struggled for a few years here figuring out how to make a decent phone. PC guys are not going to just figure this out. They’re not going to just walk in.”

– In 2006, Palm CEO Ed Colligan utters the words he’s been choking on since the debut of Apple’s iPhone

For Palm (PALM), which lost two-thirds of its market value in 2008, today may well be a watershed event–the point at which its long downward trajectory was suddenly reversed, buoyed up by a new operating system too long in coming. At a Consumer Electronics Show event later this morning, the company is expected to uncrate its Nova OS and a line of Nova-powered offerings with which it hopes to reinvigorate the Palm franchise.

Hope, of course, is the operative word here. Because while insiders describe Nova with superlatives typically reserved for the likes of Apple (“We’re onto something huge,” Palm engineer Mike Bell recently told BusinessWeek. “Some of the stuff we’re working on here is mind-blowing.”), Palm’s platform and its business remain very much a show-me story–or rather a you-can-show-me-but-I-probably-won’t-believe-you story. Consider this late December research note from Needham analyst Mark May:

Although the new platform is unlikely to challenge any of the competing smartphone platforms, the credentials of Palm’s engineering team lend a modicum of credibility to this possibility…. Palm is on the verge of oblivion. While the company has traded water the past three years, new competitors, such as Apple (AAPL) and Google (GOOG), have entered the market while others, such as Research In Motion (RIMM), have gotten much stronger.

Clearly, May isn’t buying Palm’s “we’re onto something huge” claims. That said, there’s no reason to dismiss them–just yet, anyway.