Nanotech - The Circuits Blog

Updated at 1:30 p.m. PDT: adding information about Core i7, i5, and i3 branding.

Intel's upcoming "Arrandale" will be the first highly integrated chip of its kind from Intel and is expected to run the gamut of laptop designs, from ultrathin to mainstream.

Dell ultrathin Adamo: a category of laptops that will likely use a number of different Arrandale chips

(Credit: Dell)

Due by the fourth quarter, it will be the first Intel product to put two processor cores and a graphics function together in the same chip package. Intel covered the underlying architecture in a presentation at the Hot Chips conference in Palo Alto, Calif., this week and in a recent blog described the design, saying it "will be the basis of all upcoming new Core chips (Core i3, i5, and 7) over the next few months."

Arrandale will come under the Core i3, Core i5, and Core i7 brands, using the chipmaker's most advanced 32-nanometer technology (Intel chips are currently built on a 45-nanometer process) and will populate consumer and business laptops.

The compact chip, however, is not without its challenges. "A high level of integration is always a compromise. There's never a free lunch," said Ashok Kumar, an analyst at investment bank Collins Stewart. "It's a question of how much performance you have to compromise to get that level of integration and low power consumption."

"There won't be a significant jump in performance, but price and power consumption will be lower," said Jon Peddie of president and founder of Jon Peddie Research.

Last month, Japanese-language technology Web site PC Watch published specifications for Arrandale and other upcoming Intel processors that were, PC Watch says, obtained from an OEM (original equipment manufacturer) computer manufacturer. It shows Arrandale coming in mainstream as well as low-voltage and ultra-low-voltage versions. The latter two classes of chips have typically gone into upscale svelte designs such as the Dell Adamo and Apple MacBook Air.

Arrandale-based chips, however, are expected to quickly go downmarket and bring Intel's new Core i "Nehalem" microarchitecture to the new category of laptops called ultrathins, which resemble the MacBook Air and Dell Adamo but are about half the cost.

A separate series of new chips for Netbooks, codenamed Pine Trail, will also appear by early 2010 and feature a high level of integration.

The first Core i7 mobile processors will arrive by September or October. This quad-core series, codenamed Clarksfield, will be for high-end gaming laptops and mobile workstations. (For the codename buffs who actually keep track of these things, Calpella is the platform for Clarksfield, Westmere is the platform for Arrandale.)

During Intel's earnings conference call Tuesday, CEO Paul Otellini said inexpensive "ultra-thins" will give users what they're missing in Netbooks, a theme that the chipmaker has been reiterating in various forums lately.

Acer Aspire Timeline ultra-thin laptop

(Credit: Acer)

Intel continues to try to maneuver this new and more profitable category of laptops into territory where Netbooks continue to hold mindshare. Ultra-thins are low-cost laptops, typically with 13-inch screens, based on Intel's ultra-low-power (ULV) chips. Netbooks have screens usually no larger than 11 inches and use Intel's lower-cost, lower-performance Atom processor.

Echoing prior comments by other executives, Otellini said that ultra-thins address the Netbook's shortcomings. "When people try to do 3D games on these things (Netbooks) or try to run their office applications on them, they tend to think it's a bit slow and that isn't just the processor, it's the entire architecture," he said in response to analyst's question during the conference call, which was streamed on Intel's Web site.

"Now, if you want a thin and light notebook, you don't have to just pick a Netbook. You can pick an affordable notebook that has more functionality," Otellini said.

Well-established consumer perceptions of Netbooks and the higher prices of ultra-thins, such as the $699 Acer Aspire Timeline, makes the latter a challenge to position in the marketplace.

"When we first released our ultraportable (ultra-thin) a lot of people looked at it and said, 'oh it's Netbook,'" said Kelt Reeves, president of enthusiast PC maker Falcon Northwest. "No, it's close to a Netbook in size but it's much, much more capable," Reeves said, addressing user misconceptions.

Windows 7 may not go very far in correcting all the confusion. "Windows 7 runs well even on a $199 Netbook," said Ashok Kumar, an analyst at investment bank Collins Stewart. Kumar said Intel may continue to have trouble managing consumer perceptions of Netbooks and ultra-thins.

Otellini also revisited the subject of cannibalization--that is, the tendency for Netbooks to take market share from more mainstream laptops. "We're talking about a total cannibalization that's probably no more than 20 percent," Otellini said, in response to another analyst question.

The Intel CEO also said that Netbooks may become increasingly popular as a wireless 3G device sold by telecommunications companies. "I think in 2010 that's likely to be a large part of the business...There was a Best Buy, Sprint Netbook ad last week at $0.99 if you signed up for two years...And you'll start seeing more of that," he said.

Updated at 3:45 p.m. PDT: adding comments from earnings conference call.

Intel on Tuesday posted a second-quarter loss of $398 million, stung by a fine imposed by the European Union, but the chipmaker is optimistic about the second half of the year as it beat analyst estimates.

The loss of 7 cents a share compares with a profit of $1.6 billion, or 28 cents a share, reported a year ago. Without the $1.45 billion EU fine, Intel had a profit of $1 billion, or 18 cents per share. Analysts had expected a profit of 8 cents per share.

"Intel's second-quarter results reflect improving conditions in the PC market segment with our strongest first- to second-quarter growth since 1988 and a clear expectation for a seasonally stronger second half," said Paul Otellini, Intel CEO in a statement.

In an earnings conference call Tuesday afternoon, Otellini qualified this statement somewhat, saying that there won't be a "recovery to prior levels."

Revenue was $8 billion, down from a year-earlier $9.5 billion. Revenue from Intel Atom microprocessors, used widely in Netbooks, and chipsets was $362 million, up 65 percent sequentially.

Gross margin, a crucial profit indicator, was 51 percent, up 5.5 points sequentially but down from 55.4 percent posted a year earlier.

The replenishment of inventories by customers was a positive sign, said Stacy Smith, Intel's chief financial officer, speaking during the conference call. "In anticipation of a seasonally up second half, the supply chain (buyers of Intel chips) began refilling inventory positions that had been depleted over the past two quarters," Smith said. "As a result, we experienced better-than-expected demand for microprocessors and chipsets."

"Consumer purchases led the way," Otellini said in the conference call, referring to consumer laptops that saw growth.

Corporate enterprise business, however, was "weak," Otellini said. Though the Intel CEO expects companies to update aging computers, "we're not counting on that in large measure in 2009," he said. Dell executives said Tuesday that global technology spending will likely remain weak for the near term as companies delay computer purchases, according to an AP report.

Otellini said he had "no opinion" on the impact of Windows 7--due later this year--in the consumer market but expected businesses to "get ready for buying next year."

Market researcher iSuppli said Tuesday that for the first time since the Dot-Com bust of 2001, the global PC market will suffer a contraction in unit shipments in 2009, due to a combination of falling IT spending and plunging sales of desktop computers.

Global PC shipments are expected to decline to 287.3 million units in 2009, down 4 percent from 299.2 million in 2008, iSuppli said.

"If you look across the pond in Europe demand is decidedly weak," said Ashok Kumar, an analyst at investment bank Collins Stewart. "And in China all the anecdotal data points are no better than tepid. None of the geographies are firing," Kumar said.

Updated at 12:15 p.m. PDT: adding Intel comment and additional discussion about laptop casing.

An analyst said Wednesday that some PC makers are hitting snags as they try to bring out ultra-thin laptops.

"Early production units being built in plastic, with the bottom case being plastic, are cracking," said Broadpoint AmTech analyst Doug Freedman, in a phone interview, referring to discussions he had with original equipment manufacturers (OEMs) and and original design manufacturers (ODMs). Typically ODMs don't market under their brand name but supply devices to OEMs, which then slap on their own brand.

Freedman wrote about the problem in a research note distributed Wednesday morning.

"So, to get that really thin form factor that they're after, they're probably going to have to go with a metal case," he said.

Pricey ultra-thin laptops like the MacBook Air and Dell Adamo are made of metal. Lower-cost ultra-thin laptops are typically made of plastic.

In the report, Freedman refers to ODMs and OEMs trying to bring out laptops based on Intel's "CULV" technology. CULV, or consumer ultra-low voltage, is a strategy Intel launched at Computex in June to engender a category of low-cost ultra-thin laptops that offer the portability of Netbooks but are more powerful--and more expensive. These laptops use low-power "ULV" (ultra-low-voltage) processors, as dictated by the space-constrained, ultra-thin designs.

"ODMs were advising their customers to switch to full-metal cases," Freedman said of his discussions with ODMs. "Cost-reduction features are going to be hard in that form factor on the industrial design side," he said.

Intel issued a statement Wednesday saying that the case problem that Freedman refers to has nothing to with Intel processors. "Case design issues reported to be found by an ODM, not consumers, in early production units for ultra-thin laptops have nothing to do with Intel processors whatsoever. We want to be clear that this is not a CPU design issue," Intel said in a statement.

Freedman said some PC makers are opting for large, 11- and 12-inch Netbooks with the Atom processor--and Nvidia's Ion chipset in some cases--instead of ultra-thin ULV laptops based on Intel's Pentium, Celeron, or Core 2 architectures.

"Just look at Lenovo. They're the guy that is not falling in line with Intel's aspirations of 'we don't want 12-inch Netbooks.'" he said.

This summer, both Samsung and Lenovo will begin marketing 11- and 12-inch class Netbooks, respectively, based on the newest Atom processor and Nvidia's Ion chipset.

Intel has updated its price list with new processors, including new Core i7 chips and a bevy of mobile models.

HP m9600T features the top-of-the-line Core i7 975

(Credit: Hewlett-Packard)

Many gamers have been waiting for the update of the "Nehalem" Core i7, which was introduced last November. Intel's update Tuesday includes the newly minted i7-975 (8M L3 cache, 4 cores, 8 threads, 3.33GHz, 6.4 GT/s QPI). This is priced at $999.

For the uninitiated, threads effectively double the number of tasks a processor can do, GT/s stands for giga transfers per second, and QPI is Intel's new Quick Path Interconnect technology.

But there's more. The i7-950 boasts identical specifications except for a lower 3.06GHz clock speed and 4.8 GT/s. It is priced at $562.

Hewlett-Packard's m9600T tower can be configured with the i7-975 and a 1GB Nvidia GeForce GTS 250 graphics card for just over $1,900.

Other vendors such as Falcon Northwest offer decked-out systems at a big price. The Falcon Northwest Mach V is priced at more than $4,000 with 6GB of memory, 1GB Nvidia GeForce GTS 250 graphics card, and a 256GB solid-state drive.

Equally anticipated are the new Intel ULV (ultra-low-voltage) processors. Though some of these were were listed at the end of March (such as the 5-watt, single-core SU3500 and 10-watt, dual-core SU9600), the 10-watt Pentium architecture-based SU2700 (1 core, 2M Cache, 1.30 GHz, 800MHz front-side bus) is new. Intel is not listing this chip, nor is it publishing a price. Though notebooks with this chip are expected to go as low as $499, according to Intel.

Laptops using the ULV chips include the ultra-thin Asus UX30, which will feature the 1.6GHz SU9600, among other chips, and the MSI X340 X-Slim, which sports the SU3500.

Intel also listed new mainstream mobile processors, including the 35-watt T9900 (6M L2 cache, 2 cores, 2 threads, 3.06GHz, 1066MHz FSB). This goes for $530.

Also listed as new is the 28-watt P9700 (6M L2 cache, 2 cores, 2 threads, 2.80GHz, 1066MHz FSB). This lists for $348. The existing T9600 (2.8GHz) fell in price 40 percent to $316 from $530.

Intel marketing chief Sean Maloney

(Credit: Intel)

Unleashing innovation is key no matter what laptop category you're talking about--whether Netbooks or low-cost notebooks, said Intel's sales chief, ahead of this week's Computex trade show in Taipei.

I spoke briefly with Intel's marketing chief Sean Maloney--who is at Computex this week--on Monday night and asked him about how the wave of low-cost, thin notebooks based on his company's "ULV" (ultra-low-voltage) chips may affect Netbook sales.

New, aesthetically appealing, inexpensive notebooks, such as the $699 Acer Aspire Timeline, could make Netbooks less attractive, which pin a lot of their popularity on bargain-basement pricing.

Maloney said Intel is not going to fret over sacrificing one category of laptops because it needs to protect another.

"It's a loser mentality to not develop one segment because you're worried about the other," he said. "I think we have several years ahead of us where we can innovate the heck out of any of these categories without getting defensive about the other one. You just need to unleash innovation in all of the segments and see what happens."

And what about the new 3G-capable Netbooks--which Qualcomm had dubbed "smartbooks"--appearing at Computex from Asus and upstarts like Mobinnnova which are tied to the ARM processor and sold through telecommunications providers? "The more the merrier. The more innovation there will be. It's good for the industry to have competition," Maloney said.

New ULV notebook wave: Acer Aspire Timeline has a number of the same specifications and attributes of the upscale Dell Adamo but is priced more than $1,000 below the Adamo

(Credit: Acer)

Maloney continued. "We've shipped very large numbers of Netbooks through service providers in the last year and a half. Most of the service providers around the world have been shipping Netbooks for some time," he said. Hewlett-Packard, for instance, is now selling an Intel Atom-based Netbook at Verizon stores in the U.S. with 3G built in.

And, how important is the rollout of the new ULV chips? "This is a big announcement and it's kind of on par with the original announcements we made with the original Centrino," Maloney said.

"Fashion is going to play an ever-bigger role (in notebooks). It's like the cell phone industry four or five years ago. An incredible number of designs are coming out in the thin form factor."

"Very light, very thin, and incredibly long battery life," he said of the ULV laptops. Sounds a lot like the evolution of the Netbook--except it isn't called a Netbook. But, as Maloney said, may the best product category win.

Intel is launching its line of processors for thin, inexpensive laptops at the Computex tech conference in Taipei. Intel marketing chief Sean Maloney talked about this in a phone interview.

"It's clear that people like devices to be thin and light," said Maloney, who was speaking from the Computex conference in Taipei where he will be giving a keynote on Tuesday.

"We've really taken that to heart and come out with a complete top-to-bottom range of microprocessors that enable radically longer battery life and much smaller designs," said Maloney, referring to Intel's new lineup of consumer ultra-low-voltage (CULV) processors.

Maloney continued. "There are a lot of computers being announced here (Computex) that look like conventional notebooks in terms of how wide the screens are, but they're super-thin, the performance is very good, and they get up to nine hours battery life without a big, fat battery at the back," he said.

MSI X340 X-Slim laptop is one of the first CULV laptops

(Credit: MSI)

"It's a big change for industry. It means the technology weaves its way into your life more because you're going to have all-day notebooks," Maloney said.

The new processors will encompass the Core 2, Pentium, and Celeron processor architectures, according to Maloney.

Prices for these new laptops will start at $399 and range up to $2,000 in some cases, Maloney said.

And will laptops based on these chips impact the sales of Netbooks? "I don't think so," Maloney said, but added: "It's a loser mentality to not develop one segment because you're worried about the other."

Maloney continued. "The demographics (for Netbooks) that's completely untouched is kids between the ages of 7 and 12. So, the Netbook market is still at a very early stage," he said.

In addition, Intel unveiled the Mobile Intel GS40 Express Chipset for the new ULV-based laptops. This "value" chipset enables ULV-based laptops to support HD (high-definition) playback, Windows Vista Premium support and native support for integrated HDMI (High-Definition Multimedia Interface).

Wireles options will include embedded WiMAX or Intel "My Wi-Fi" technology. My Wi-Fi transforms a laptop into a WiFi personal area network, connecting directly with up to eight Wi-Fi-certified devices, according to Intel.

Though a crush of new thin laptops are expected, the MSI X340 is one of the first. The X340 has a 13.4-inch screen, weighs 2.86 pounds, and measures .78 inches thick.

Intel said Netbook cannibalization of notebook PC sales is about 20 percent in Europe, according to a news report Wednesday. But this trend may ebb later this year when the "affordable" ultra-thin laptop category takes off, leading to a cannibalization reversal of sorts.

Christian Morales, Intel's European sales chief, said Netbook sales were about 16 percent of all notebook sales globally, and a little higher in Western Europe, according to Reuters. "In Britain and Italy they may account for as much as a quarter of all notebook sales," he told Reuters.

Netbooks are small, inexpensive laptops--typically below $500--designed for Web browsing, email, and less-demanding media applications.

Intel Netbook share was about 16 percent in March of this year.

(Credit: Intel)

Intel's marketing chief, Sean Maloney, presenting at the company's investor meeting on May 12, said that the share of Atom processor-based Netbooks out of the total mobile PC market was about 16 percent in March. (See "Netbooks Mix of Mobile PCs" chart.) And he showed that the market share for Netbooks--month to month--hovers around 15 percent.

"The market has not all lept over to Netbooks," Maloney said at the meeting. "We're very comfortable with having established the (Netbook) category. We believe now that Netbooks are an under-distributed product line." Cannibalization, when it occurs, tends to affect low-end laptops based on Celeron processors, he said. "Atom is eating into Celeron. And we're quite fine with this," Maloney said.

Intel's ramp of inexpensive ultra-thin "CULV" laptops may eat into Netbook sales

(Credit: Intel)

Then later in his presentation, alluding to Intel Consumer Ultra-Low-Voltage (CULV) chips due to appear in inexpensive laptops starting in June, he said that this is "an opportunity for upsell. We don't need to give this stuff away. The industry doesn't need to give this stuff away. We can reach new price points and we can also get paid for it." CULV processors will be based, to a large extent, on Intel's Core 2 architecture, which offers better performance than the Atom chips used in Netbooks.

Maloney's comments imply that CULV-based laptops will offer stiff competition for Netbooks, especially high-end Netbooks priced above $400. Many CULV notebooks should fall into the $599 to $799 price range--the upper range of Netbooks--according to Ashok Kumar, an analyst at investment bank Collins Stewart. And some major PC makers expect CULV to become one third of total latop sales by next year, Kumar said.

Though no one can forecast how popular these new inexpensive thin laptops (think: MSI X-Slim series or a hypothetical $800-$900 Apple MacBook Air) will be, Intel is obviously expecting the category to take off. (See "Ultra-Thin Affordable Volume Ramp" chart.)

Maloney said growth markets for Netbooks are children--he said this market is still under-served--as well as Netbook bundles with telecommunications service providers. Verizon, for example, is now offering Hewlett-Packard Netbooks with 3G functionality built in.

Netbooks had a rocky start last year in some markets, Intel's marketing chief said at the Intel investor meeting Tuesday.

"In the first period--June, July, August of last year--there were some in the retail channels that were shipping (Netbooks) as notebooks," Sean Maloney said in a question-and-answer session that was streamed over the Web. "They were running ads that had a continuum of notebooks and had this Netbooky thing in there--it was called a notebook. They had very high return rates and a couple of these guys had return rates in the 30 percent range, which is a disaster."

Maloney continued. "So we gently went back to some of those chains and said if you segment them differently and state up front what they do and don't do, things will be healthier. You've seen some of the European channels saying this (Netbook) product does not do X and being very black and white and very clear."

Intel's marketing chief Sean Maloney showed this slide Tuesday and did a live demonstration showing what a Netbook can't do.

(Credit: Intel)

At the investor meeting, Intel demonstrated on stage the performance gap between a Netbook and a mainstream notebook. In the demonstration, a Netbook and a notebook ran the same high-definition video of the NBA basketball playoffs. The video on the Atom processor-powered Netbook was jerky and dropped frames, while the Core 2 chip-based notebook's video was smooth.

The point was obvious: the Netbook's Atom silicon falls short in performing some tasks that a mainstream notebook handles with relative ease.

Along these lines, it also became clear at the meeting that there is a struggle brewing to clearly define to consumers the difference between Netbooks and upcoming ultra-thin notebooks, also referred to as the Consumer Ultra-Low-Voltage or CULV category of laptops. CULV notebooks--due in June--are expected to be priced in a market segment just above Netbooks.

Intel executives were peppered with questions from the audience--mostly representatives from Wall Street firms--about Netbooks. One audience member wondered whether Intel "had considered doing an informational advertising campaign" and asked: "Do you find that at all necessary to clear up some of the misapprehensions about what you can and cannot do with these devices (Netbooks)?" This question elicited the response from Maloney quoted above.