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During Intel's earnings conference call on Tuesday, CEO Paul Otellini talked about the growth of notebook PCs versus Netbooks, and Windows 7 adoption in business, among other topics.

Otellini was quick to trumpet the fact that its mainstream notebook business beat Netbook growth. "We saw the sequential unit growth rate of notebook processors and chipsets actually exceed the growth rate of Atom processors and chipsets," he said.

Later in the call, Otellini said: "While Atom and Netbooks are important growth drivers for us, our traditional notebook business remains one of the primary drivers of revenue growth and we expect that to continue in the future."

Otellini, again in the call, expanded on this theme, adding that while Netbooks should see significant growth in 2010 over 2009, the notebook market is flourishing. "We're still bullish (on Netbooks) but what we've seen this quarter though is that the notebook market is alive and well and Netbooks are market-additive for Intel and the industry," he said. "Market-additive" is code for an ancillary product, not a mainstream product.

Intel CEO expects more attractive ultra-thin laptops in the coming months

(Credit: Intel )

He also addressed the new category of ultrathin laptops, which are inexpensive laptops--between $500 and $900--that slot in above Netbooks. "The bulk of the units that have shipped to date were single-core versions of the products. Late last quarter, we introduced the dual-core version of those products. You'll see a number of laptops show up in retail with the dual-core versions for the holiday season...more ergonomically designed, thinner, lighter."

Responding to analyst questions, Otellini also addressed Windows 7 adoption in business. "We see a lot of interest at corporations around Win 7 and the new Nehalem-based (PC models)," he said, referring to Intel's new Nehalem-based Core "i" series of processors. "They're made for each other in terms of the performance and power management and security characteristics."

He continued: "I would expect that the (corporate Windows 7) evaluation process will happen over the rest of this year and we'll start seeing corporate purchases on a refresh basis begin in 2010."

Here's a rundown of other comments:

• Consumer segment strong: "The strength in our business remains primarily consumer driven with broad-based demand across all geographies."--Otellini.
  
• Growth phase: Refuting a question about Intel becoming "smaller" next year: "We're finished with the cutting phase of our efficiency efforts and now in the growth phase of that efficiency efforts."--Chief Financial Officer Stacy Smith.
  
• Inventory hubs: At large PC customers, component inventories levels are at roughly half of the peak level late last year and approximately flat throughout 2009. Intel has a better handle on inventories now using a mechanism called inventory hubs. "We hold the inventory for our large OEM customers, who then pull inventory only if needed...This give us increased visibility into real-time production levels."--Otellini
  
• Nehalem server processors: (dual-processor). "It's not so much an upgrade cycle that's driving the volume right now, it's economics of the data center. People are looking at swapping eight to nine older-generation servers for a single Nehalem server."--Otellini.
  

SAN FRANCISCO--Dell is launching its first laptops with Intel's new Core i7 processor for laptops.

The Intel "Clarksfield" Core i7 processor boasts four cores and is the chipmaker's first mobile chip based on its new Nehalem microarchitecture. Most Intel processors will move to this design in 2010.

Dell is trying to take an early lead in embracing the new technology. Dell's flagship product for the mobile Core i7 will be the 15-inch Alienware M15x gaming laptop. Dell is also offering the chip as an option on other laptop models worldwide, including the Studio 15 and Studio 17.

At the Intel Developer Forum today, David Perlmutter, executive vice president and co-general manager of Intel Corporation's Intel Architecture Group, is discussing Intel's mobile Nehalem platform that also includes a future chip codenamed "Arrandale," which will integrate graphics into the CPU, or central processing unit.

The Core i7 is packaged with the Intel PM55 Express chipset--companion silicon that assists the processor in communicating with the rest of the system. Two features that differentiate Core i7 from Core 2 Duo processors (the most-widely-used chips in laptops today) is Turbo Boost and Hyper-Threading. Turbo Boost speeds up and slows down individual cores to meet processing and power-efficiency needs, respectively. Hyper-Threading can double the number of tasks--or threads--a processor can execute.

The Alienware M15x configurations include the Intel Core 920XM CPU and 1GB NVIDIA GeForce GTX 260M graphics chip.

The Alienware M15x will come with Intel's first Core i7 mobile processor.

(Credit: Dell)

The Dell Studio 17 will feature the Intel Core i7 720QM 1.6GHz processor, a 1GB ATI Mobility Radeon HD 4650 graphics chip, 17.3-inch HD+ (1600x900) display, and 9-cell battery.

The Studio 17 starts at $1,099.

Dell will also offer the Studio 15 with Core i7. Configurations include Core i7 720QM 1.6GHz, 512MB ATI Mobility Radeon HD 4570 graphics chip, and 4GB of memory. Pricing start at $999.

And the Dell Studio XPS 16 will come with a Core i7 option, with a starting price of $1,249, Dell said.

SAN FRANCISCO--Intel is expected to roll out the first "Nehalem" processor for laptops on Wednesday.

Nehalem is Intel's new processor microarchitecture and is used currently in its high-performance Core i7 series of desktop processors and more inexpensive Core i5 series. The chipmaker is expected to move most laptop, desktop, and server processors to the Nehalem architecture in 2010.

The Core i7 "Clarksfield"--expected to be introduced Wednesday at the Intel Developer Forum--is a quad-core processor for higher-end laptop designs. Laptop models from major PC makers are also expected.

The Nehalem architecture will manifest itself later in laptops as "Arrandale," a dual-core CPU (central processing unit) that integrates graphics into the CPU--a first for Intel. The company demonstrated Arrandale on Tuesday in a laptop during CEO Paul Otellini's keynote address at the Intel Developer Forum.

Earlier this month, in a phone interview, Intel Vice President Steve Smith described the technology as moving its high-performance desktop Nehalem technology into laptops. "We just announced Lynnfield (the Core i5 and i7 chips for desktops), Clarksfield is the equivalent product for notebooks," Smith said at that time.

He continued: "Quad-core, 45-nanometer. Based on Nehalem technology but optimized with power management and integration of the PCI express I/O. Moving from a three-chip solution in the original Nehalem products to two chips--and that is our path going forward." I/O, or input-output, is silicon that enables a processor to talk, and shuttle data, to other parts of the system and peripheral components.

Updated on September 23 at 12:30 a.m. PDT: adding information about the Atom Developer Program.

SAN FRANCISCO--In his keynote at the Intel Developer Forum on Tuesday, Intel CEO Paul Otellini focused on moving beyond the PC while introducing a new processor technology and a new development platform for the Atom processor.

"We're moving from personal computers to personal computing," Otellini said.

Intel CEO Paul Otellini shows a next, next-generation wafer containing 22-nanometer chips

(Credit: Stephen Shankland, CNET News)

He called this a transition to a continuum. "The same experience on any device. How we build this continuum out. That's the theme," he said. "Moore's Law, platform architecture, and software--the combination of these three will allow us to build the continuum."

Otellini also had a surprise. He introduced the company's next, next-generation technology, based on a 22-nanometer process. Intel currently makes chips based on 45-nanometer technology and will move to 32-nanometer by the fourth quarter of this year. After that comes 22-nanometer chips.

Generally, the smaller the chip's geometry, the faster and more power efficient the chip is.

"The world's first working 22-nanometer silicon technology," Otellini said. He showed a wafer containing SRAM memory chips that each contained 2.9 billion transistors. "This is on track for for second half 2011."

In the more immediate future are the 32-nanometer processors. "Thirty-two-nanometer enables us to build a billion transistors in high volume. Started production on Westmere (the 32-nanometer technology) for shipment to customers in Q4." Otellini demonstrated the upcoming 32-nanometer mobile "Arrandale" processor--which integrates graphics silicon with the main processor--in a laptop.

The Intel CEO also introduced a new Intel developer program for the Atom processor in order to boost software adoption on Netbooks and expand the development of software beyond those devices. Asus, Acer, and Dell are supporting the program, Otellini said.

The program provides a framework for developers to create and sell software applications for netbooks with support for handhelds and smart phones available in the future. "We want to fuel the growth of Intel Atom-based products designed for the mobile lifestyle," said Renee James, corporate vice president and general manager, Intel Software and Services Group, in a statement.

As another example of where Atom will be used, Otellini said that automakers Daimler and BMW will use in-vehicle Atom-based infotainment systems from Harmon International in future vehicles.

Otellini also addressed the European Commission's publication on Monday of antitrust allegations against Intel. "They consistently ignored information," Otellini said. He added that customers such as Dell will come forward to state that some of the information was "wrong." In a statement, Intel said Monday that "the Commission relied heavily on speculation found in e-mails from lower level employees that did not participate in the negotiation of the relevant agreements."

Addressing the PC market, Otellini said that he expects "significant growth in 2010." This year he sees "units flat to slightly up," he said, but next year "I think the market is poised for a resurgence."

Updated at 2:15 p.m. PDT: adding information about Dell system.

The main message of the new Core i5 chip is simple: it's cheap--even cheaper than Intel chips based on older technology.

(Credit: Amazon)

The i5, which brings Intel's new "Nehalem" microarchitecture into the mainstream PC market, immediately makes many, if not most, of the older desktop processors obsolete. Consumers need look no further than pricing on sites like Amazon. The i5-750 lists for $250, while the older--based on Intel's last-generation "Core 2" microarchitecture--Q9650 lists for $319.

The official pricing from Intel in quantities of 1,000 units makes the price gap even more stark: $196 for the i5 and $316 for the Q9650.

"The new Core i7's and Core i5's bring pricing to more mainstream levels, with the Core i5-750 at a 1KU (1,000 units) price of $196, which is well below the Core 2 Quad Q9650 at $316," said Intel spokesman George Alfs.

"We are very serious about bringing all new Core processors to new price points and you'll see this trend continue with Westmere," he said, referring to Intel's upcoming processors based on a next-generation 32-nanometer manufacturing process.

Comparing the old with the new, some consumers might point out that the older Q9650 has, for example, more on-chip memory and a higher clock speed than the Core i5. But the writing is on the wall: consumers will almost always opt for new over old when new is less expensive.

On Tuesday, Dell began offering the Studio XPS 8000 tower with the Core i5 starting at $799 and packing 4GB of "Dual Channel DDR3 memory" and a 500GB hard disk drive, among other features. Adding a 20-inch monitor hikes this to $979.

The message is more muddled, however, for the updated Core i7 processors because they maintain the same "i7" identifier as their predecessors--first launched in November--but offer different features that are not readily apparent to less-sophisticated buyers and potentially vexing for some savvy consumers.

"It gets confusing for the more technically knowledgeable buyer, and for us as system builders," said Kelt Reeves, president of enthusiast PC maker Falcon Northwest. "Buying a Core-i7 950 model? Well then you can have a maximum of 12 gigs (gigabytes) of triple channel memory and you buy your memory in sets of 3 sticks. Buying a Core i7-870? Well then your memory is installed in pairs and the max you can have is 8 gigs," he explained.

Reeves continued. "For instance, if you're a heavy Photoshop user having 12 gigs of the fastest memory might be very important to you," he added, saying in that case a consumer would want to opt for a Core i7 900 series over the newer 800 series.

There are other gotchas too. On the i5 processors a feature called hyperthreading is not included, as CNET's Rich Brown pointed out Tuesday. Hyperthreading effectively doubles the number of tasks--or processing threads--a chip can do. "Heavy multitaskers and those who use multithreaded software will feel the loss here," Brown said.

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.)

Nvidia is readying silicon that would work with Intel's newest processor design, according to a report. Intel claims Nvidia does not have the legal rights to make companion chips for its newest processors.

In February, Intel alleged in a lawsuit that the 4-year-old chipset license agreement with Nvidia does not extend to Intel's future-generation processors with "integrated" memory controllers, such as its "Nehalem" Core i series of processors.

A chipset is companion silicon to the main processor. Integrated memory controllers are built into the processor itself to increase performance between the processor and memory.

According to a report on Chinese-language Technology Web site HKEPC, Nvidia is planning to bring out a MCP99 chipset that supports Nehalem processors and Intel's Direct Media Interface, or DMI. Nvidia cited DMI back in February as a technology that Intel was trying to prevent it from using.

Despite the report's claims, it is not clear yet whether Nvidia would in fact bring out a chip before the legal matter is settled with Intel.

Nvidia had no comment on the report.

Nvidia's current 9400M Intel-compatible chipset, which is used with Core 2 architecture-based processors, has been successful. It is used in Apple's MacBook and Toshiba's Qosmio lines, for example, and in Netbooks that use the Atom processor.

During Nvidia's July 26 earnings conference call, in response to an analyst's question about building chipsets for Intel's Nehalem processors, Nvidia CEO Jen-Hsun Huang said: "We're not necessarily building chipsets for future Intel buses. We've not commented anything on that and so you are just going to have to wait to see what we come up with," he said. "Our company is...pretty darn clever. There is a lot of ways to skin the cat," he said.

Intel said the matter is being left to the courts. "We tried many times to resolve the conflict but we couldn't resolve it. So we asked the courts to," said Intel spokesman Chuck Mulloy. "By the time something comes to market, hopefully we'll have some resolution," Mulloy said.

Waiting for a Core i7 laptop? While Intel is slated to release its first mobile "Nehalem" Core i7 processor in the coming months, the desktop counterpart has already spawned a cottage industry of benchmark-busting laptops.

"It's completely revitalized the desktop replacement laptop," said Kelt Reeves, president of enthusiast PC maker Falcon Northwest, referring to designs that have shoehorned a desktop Core i7 processor into a laptop enclosure.

At the very high end of Falcon Northwest's lineup, interest has shifted to models with the Core i7 processor and away from models oriented around extreme-performance graphics cards, Reeves said.

Falcon Northwest laptop can use Core i7 processors running at speeds up to 3.33GHz

(Credit: Falcon Northwest)

For instance, the Falcon Northwest FragBook DRX Core i7-based models come with Nvidia's lower-performance GeForce GTX 280M graphics processor instead of the higher-end Scalable Link Interface (SLI) technology, which uses two graphics chips. But performance has actually improved in many cases, Reeves said.

"It's a much better balance of a very-high-powered CPU and a very-high-powered graphics card," he said.

Only at the highest settings in popular games like Crysis and World in Conflict did laptops using older Intel Core 2 processors with SLI graphics offer any competition to the Core i7 models, according to Reeves.

AVADirect Clevo D900F Core i7 laptop: a lot of processing power means a lot of fans (count 'em: 4)

(Credit: CNET Reviews)

But it may be too charitable to call these laptops. Sheer size and heat dissipation requirements almost defy laptop categorization. "There's a huge set of heat pipes and copper cooling fins and fans needed to duct out all that power," Reeves said.

Falcon Northwest is not the only company selling large luggable, heat-spewing laptops. CNET Reviews looked at the AVADirect Clevo D900F Core i7 laptop with the same Nvidia graphics processor and said that "the D900F handily topped all of the other performance laptops we've tested. Its processing results were more on par with the Alienware Area-51 X58 gaming desktop (using a 3.2GHz Intel Core i7 chip)."

Smooth Creations and CyberPower, among others, also offer laptops based on the Core i7 processor.

So when will the real deal appear? The first processor designated officially as a Nehalem mobile processor from Intel is expected to emerge by October. Code-named Clarksfield, it will be a quad-core processor, like the current desktop i7, but not impose the kind of thermal stress on the laptop enclosure that the current i7 does. Clarksfield is expected to have a thermal envelope (referred to as Thermal Design Power) that is below half of the current i7, which is rated at 130 watts for the highest-end processor.

Benchmark results for the Falcon Northwest Core i7 laptop are here.

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.