Intel's current scheme for the smartphone market is to use the Moorestown platform. AFAIK power figures are not yet available, but 2 hours is quite pessimistic, as the old Menlow architecture could feasibly reach that on one ~2Ah cell. Extrapolating from the cheaper, more power-hungry netbook CPUs is misleading.

Still, I don't expect Intel to see much success in the smartphone market -- Atom-based products will be slower, thicker, or have short battery life, and the ability to run x86 binaries (most importantly, Windows) on a smartphone isn't widely desired AFAICT.

They're far from doomed, though -- even people who don't use any Windows apps without cross-platform substitutes will be reluctant to leave their familiar OS for a little extra performance in their netbook, and Intel has faced competitors offering better value (and full compatibility) in the desktop/laptop space for years with no customer exodus.