Intel is seeing solid results for the Atom processor--possibly giving the first significant evidence of Intel's likely future as a bigger provider of low-cost processors.
Intel confirmed on Tuesday that Atom is hot. CEO Paul Otellini said that Intel didn't meet demand in the third quarter and still can't meet demand. "We did not meed demand in Q3 for the product. We are up again substantially in the fourth quarter. Our expectation is that we will meet demand by the end of the year," Otellini said.
And many of the questions from analysts in Tuesday's earnings conference call revolved around Atom as it delivered $200 million in revenue to Intel in the quarter. "Between the microprocessor and the chipset, we did have a couple hundred million dollars of revenue from Atom in the third quarter," Chief Financial Officer Stacy Smith said. "We do expect that to grow rapidly in the fourth quarter."
What Intel appears to like most about Atom is what it calls "margin characteristics." In other words, it's a low-cost processor, but it yields better margins than typical inexpensive chips like the Celeron. "What we've seen in the third quarter is a very healthy product margin," Smith said.
"On a dollar basis it's equivalent to what we see in Celeron and on a product margin percent it's higher. So if you look at it relative to our low-end mainstream stack, it's generating nice product characteristics," Smith added.
Here's the question: if more and more consumers--particularly in places like China and India--opt for Netbooks with the Atom processor rather than traditional notebooks with standard Intel mobile processors, what kind of an impact will this have on Intel's profits?
Intel claims cannibalization of (higher-margin) mainstream mobile processors is not taking place. "To date we haven't seen any evidence of cannibalization. And believe me we're looking. It's something we watch very carefully," Otellini said. "And one of the best pieces of evidence that we have is the strength in the core mobile business independent of Atom," he added.
But tighter consumer budgets worldwide could push more people toward Netbooks. A Gartner report came out Tuesday that said third-quarter PC shipment growth was driven by sales of sub-$500 notebooks. Netbooks typically sell for less than $500.
Other notable comments in the earnings conference call:
• Inventories: Taiwan and channel customers cutting back, consumer traffic overall is light--Otellini
• Intel-Micron: Joint Singapore flash memory chip fab now on hold
• Corporate segment: In Q4, corporations to show softness as IT gets rationalized in macro environment
• Nehalem processor: Intel started shipping Nehalem processor, announcement coming in November
Intel's Atom processor was prominently displayed in systems at a conference in Japan. The chipmaker's next-generation X4500 graphics also made an appearance.
Atom logo
(Credit: Intel)Small systems and circuit boards using the Atom processor appeared on the Web site PC Watch, which highlighted designs at a "Systems Expo" in Tokyo.
A host of small devices with the Atom processor are due in June. The 45-nanometer chip will compete with processors from Via Technologies such as the C7 and upcoming Isaiah processor.
Small PCs and computer systems using the low-power Atom processor included a small embedded computer from Japan-based Dux, a car "infotainment" system from Portwell Japan, and a motherboard for mobile internet devices from Sophia Systems.
Advantech was also showing an Atom-based circuit board as was Nagano. A 1.6GHz Atom-based board from Omron was on display too.
And that's not the only upcoming Intel chip that made an appearance. A board was shown with Intel's upcoming X4500 graphics silicon. The X4500 is slated to be part of the forthcoming GM45 ("Cantiga") chipset for the mobile Centrino 2 platform and the G45 ("Eaglelake-G") chipset for desktops.
Sharp got atomized Monday. The Japanese electronics maker along with Willcom announced the ultra-mobile Willcom D4 "communication device" based on Intel's Atom processor and Microsoft's Vista operating system.
Willcom D4 ultra-mobile communications device
(Credit: Willcom)Microsoft and Intel were also credited with development of the device, according to the Japanese-language release on the Sharp Web site.
The handheld-size device uses a 1.33GHz Z520 Intel Atom processor and runs Windows Vista Home Premium (with Service Pack 1). Other prototype devices based on similar designs--referred to as mobile Internet devices or MIDs--have also been shown running the Linux operating system.
With a separate headset, the device can also be used as a phone using Wilcom's Personal Handy-phone System (PHS) network, both Sharp and Willcom said.
The device weighs in at 470 grams (about one pound) and features a 5-inch sliding LCD (1024x600/262K colors) with an LED backlight, a 1.8-inch 40GB hard disk drive (Ultra ATA/100), 64-key QWERTY keyboard, a built-in camera, Wi-Fi, Bluetooth, a mirco SD card slot, and a USB 2.0 slot.
The D4's inclusion of a 40GB hard disk drive is an indicator that the device is meant to run Windows--because of the operating system's typically larger footprint--not Linux.
Intel Atom technology includes a single-chip with integrated graphics called the Intel System Controller Hub.
Atom will find its way into fit-in-your-pocket MIDs from Gigabyte, Toshiba, LG Electronics, Lenovo, and BenQ, among others. Netbooks (inexpensive, Internet-centric ultra-small notebook PCs) such as Asus's popular Intel-based Eee PC, MSI's Wind PC, and Clevo will also use the chip.
Willcom D4 is slated for a June release and is expected to be priced at 128,600 yen ($1,272).
Intel's upcoming Atom processor is all about cost. And the Atom-based Nettop desktop cuts costs right down to the bone.
Nettop
(Credit: Intel)Though Atom Netbooks such as future Asus Eee PC notebook models have been described in the press, the Nettop concept is not so clear. So, what is a Nettop?
The Nettop falls under the rubric of Intel's "Basic PC" category, whose underlying thrust is penny pinching. Cost will range from $100 to $299.
The Nettop is centered on the low-cost "Diamondville" variety of the Atom processor but incorporates a number of other cost-saving measures including what Intel lists in a "Business Client Group" presentation as "no system fans...no CPU socket...(an) optimized PSU (power supply unit)" and "cost optimized OS solutions."
Intel also states that "moving from HDD to SSD" (from hard disk drives to solid-state drives) will result in "additional platform savings."
Internet connectivity is what a user will be using the Nettop for primarily. Machines will run either Windows or Linux software.
Intel in the same presentation cites a forecast of 60 million "Basic Nettop" units by 2011.
Nettop market
(Credit: Intel Corp.)- prev
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