Intel CEO Paul Otellini told analysts that Apple's iPhone has set the bar for the mobile phone industry.

Speaking at the Morgan Stanley Technology Conference in San Francisco he observed: "Virtually every computer and handset manufacturer on the planet is struggling to figure out how to compete with Apple."

Otellini stressed that the impact of the device on the industry proves the superiority of Unix-based handsets over Windows-powered devices, and foresees future demand for ever-more powerful mobile processors as iPhone impacts on the industry.

Calling the iPhone "feature-packed", he told analysts that Intel is developing a low power processor for future devices. The chip offers the same architecture as existing Intel processors for servers and desktops, the Intel boss promised.

"If we get the power and performance right, it’s going to be a killer combination," he stressed.