Cell modem development was always something of an odd fit for Intel - it came in from an acquisition, and due to the complexities of patents and Qualcomm's domination of the modem market they only had one major customer (Apple) who used them primarily as legal leverage. Once that customer went away, it became unsustainable given the high R&D costs combined with questionable demand for discrete modems.
Intel's flirtation with low-end embedded devices makes sense on the basis that they already were using low-power Pentium-derived cores as embedded controllers, so why not offer them as standalone products. I think they clearly underestimated the costs of packaging and support for external customers, as well as the dominance ARM's Cortex-M series would establish.