Nvidia has plans for a mobile chipset that will change the look and functionality of smartphones when it hits in mid-to-late 2009. While many of the big chip vendors are placing bets on the concept of a mobile Internet device that’s larger than a smartphone, but smaller than a laptop, Nvidia’s APX 2500 chips could enable devices that are so sexy, they might render the need for an MID obsolete.

However, I’m told the company will announce an expansion of the APX chips into MIDs soon, so I could be wrong on that last point. Nvidia launched the chips that will make a smartphone function like a PC (or an iPhone) at the Mobile World Congress in February, and I can’t believe I missed it.

This is Nvidia’s first move into making the “brains” of a mobile device, and it’s using its graphics expertise to turn the devices containing the chips into portable media players that can play 10 hours of HD video (on an external screen) and 100 hours of MP3s on a single charge. All while the 750 MHz processor consumes less than a watt of power.

In a demo at Nvidia headquarters two weeks ago, I saw a device slightly larger than an iPhone power an HD rendering of a Pixar short called “For the Birds” on a big-screen TV. It was connected via an HDMI cable and it looked good at 720p. I get that some people don’t mind watching movies or TV on their cell phone or iPod screens, but if I’m able to download that content and plug it into a TV, that’s an entirely new ballgame for travel and sharing. I want that device.

The demo I saw was powered by Nvidia’s chipset running on Windows Mobile, creating a chip/OS combo that mimics some of the visual pizazz of the iPhone, but on a more business-friendly operating system. Sure, as far as mobile operating systems go, Windows Mobile isn’t exactly tearing it up, but the integration of business and pleasure could make the current angst of choosing between a BlackBerry or an iPhone a thing of the past.

The chipset will first appear at the end of this year in personal navigation devices and personal media players, with a smartphone due out in the middle of 2009. Unfortunately, the APX 2500 contains an HSDPA RF chip, so it won’t be deployed on my network, but TMobile subscribers should keep their eyes open. Like the iPhone, the APX is modem agnostic, which means it’s not tied to any particular cellular network. There’s plenty of room for Nvidia to stumble, since it doesn’t have the experience designing for the mobile space, but I’m hoping it can succeed right about the time my current mobile contract is up.

Store this one away in your “Grass is always greener” file: The two companies that make the brains found in today’s computers, Intel and AMD, are both pushing hard to get into graphics, just as the top graphics chip maker, Nvidia, is aiming squarely at the CPU space. It’s not an identity crisis so much as a testament to how important graphics have become in the consumer computing experience — and how much money can be made crunching numbers on the corporate side.

It’s also a sign of the end of the graphics processor, found on a separate card plugged into high-end machines. In order to survive, Nvidia needs to find an end market that values graphics processors for something beyond graphics. Or push graphics processors into compute-intensive applications in hopes of relegating x86 chips to running the OS and nothing else.

The battle between Intel and AMD has raged for years. When AMD purchased ATI Technologies back in 2006, the plan was to amp up AMD’s processors with an integrated graphics processor and CPU on a single chip. Project Fusion, as it’s known, was scheduled to start turning out its first chips by late 2009, but since AMD’s CTO just walked, who knows if Fusion will become as snakebit a project as Barcelona. In the meantime, AMD is settling for integrating a graphics processor on the motherboard with a CPU.

Meanwhile, Intel is scratching the graphics itch with Larrabee, a multicore chipset designed to compete with Nvidia as a graphics processor. The Larrabee chips are due out in late 2008 or early 2009.

Nvidia’s hop over the fence is a little more novel, and certainly worth noting. It’s no secret that graphics chips can perform a helluva lot of computations to deliver the ultimate in 3D gaming, but that same power can be harnessed for crunching numbers or running simulations. To that end, Nvidia last year launched technology called CUDA, which allows developers to build programs that run on graphics processors using the familiar C programming language instead of the more esoteric graphics programming languages.

With that move, Nvidia put Intel and AMD on notice. Today Nvidia’s CEO fired the first shot by introducing what it calls “The World’s Most Affordable Vista Premium PC,” a low-cost platform containing a Nvidia graphics processor and a lower-end CPU from Via Technologies. Nvidia isn’t only snubbing Intel, it’s trying to prove that PC buyers are better off with functional CPUs, and that high-performance tasks can be trusted to a graphics processor.

It’s a bold move, but if it works, Nvidia will have upended several decades of chip design. And it will likely take its success all the way to the bank.

Photo from Nvidia