Intel buying Digital's Alpha could be a 'win-win'

"We've got no information at present," said a spokesman for Digital. "We have nothing to say," said a spokeswoman for Intel.

That didn't stop rampant speculation about possibilities for the deal, with observers pointing out that it could be a smart move for both parties and unravel the knotty lawsuit covering chip patents in which Digital and Intel are embroiled.

"It makes sense, although Alpha has not had spectacular success in terms of volume," said Rana Mainee, European market planning manager at rival chip maker AMD. "It could be a win-win for both sides. The technology would be fairly attractive to Intel and coupling that with the negating of the lawsuit would be very, very convenient. I don't believe Alpha has made a profit and it costs a lot of money to keep the R&D going."

Mainee said that the potential deal could also fit the mindset of Digital CEO Robert Palmer. "Bob Palmer is very focused on making Digital profitable and bringing it screaming and shouting into the PC market. He wants to play by the PC market rules," he said.