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RIP Netbook: It’s Time for Atom to Shine

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We've reached the end of an era, thanks largely in part to the rise of the tablet. Acer and Asus, the final two manufacturers of the netbook, will no longer be producing Intel's (NASDAQ: INTC  ) inspired line of low-power, low-cost laptops. While this may sound like the nail in the coffin for Intel's Atom line of processors, the company has shifted its focus to potentially larger-scale growth areas, which should more than make up for the shortfall.

The OEM silver lining
The average selling price for laptops has actually increased by over 5% since 2011. When you remove the sub-$300 segment of the market, it's practically a shoo-in that ASPs will rise. The less obvious reason why ASPs have risen is because notebooks and Ultrabooks have begun offering premium features like touch screens. Premium features call for premium screen materials like Corning's (NYSE: GLW  ) Gorilla Glass, which has already been used on more than 1 billion devices from over 33 brands. This highly durable, scratch-resistant glass has become the de facto standard for premium products. As long products featuring Gorilla Glass continue shipping, Corning will continue benefiting from the growing trend of multiple screens.

Atom wants to be mobile's friend
Intel's mobile plan is quite simple. It involves shrinking the Atom chip to the point where it's just as power efficient as chips from mobile computing rival ARM Holdings (NASDAQ: ARMH  ) , which is expected to happen sometime this year with its 22-nanometer process. Thanks to our old pal, Moore's Law, Intel will do it again in 2014 , which is when some say the Intel Atom will annihilate any and all competition in mobile computing, because Intel will have shrunk the Atom to a mind-blowing 14 nanometers. It's estimated Taiwan Semiconductor (NYSE: TSM  ) will have just begun its 20-nanometer process, and its questionable if it will match Intel's superior 22-nanometer process.

Server clusters
Given the explosive rise of data and its corresponding energy needs, extreme low-energy servers have become an area of interest. Intel estimates the extreme low-energy server market makes up 6%-10% of the $10 billion server market, creating a sizable opportunity for Atom chips. Server clusters deploy thousands of low-power chips, and are designed to "farm" out large tasks into byte-sized pieces so that the chips don't become overburdened.

Atom inside!
Intel's and Atom's future is not as dire as you would think. The future direction for Atom is clear, and could provide Intel will a sizable business opportunity in the future. Most notably is the smartphone market, where Intel commands essentially zero market share. If Intel's 2014 Atom chips are anywhere near as good as they sound, we may be in for an exciting mobile computing future, powered by Atom. In the end, these are just a few of the reasons why I believe Intel is a buy in 2013.

When it comes to dominating markets, it doesn't get much better than Intel's position in the PC microprocessor arena. However, that market is maturing, and Intel finds itself in a precarious situation longer term if it doesn't find new avenues for growth. In this premium research report on Intel, our analyst runs through all of the key topics investors should understand about the chip giant. Better yet, you'll continue to receive updates for an entire year. Click here now to learn more.

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  • Report this Comment On January 04, 2013, at 10:33 PM, techy46 wrote:

    Good article and the results are already starting to occur in Windows 8 ultra-tablets wih Atom Z2760 and iSeries inside. Tbablets with Atom Clover Trail (Z2760) beat all comers includinh Apple iPad with An, Surface RT Tegra and Samsung AATIV with Qualcomm. That's the Atom 32nm and the 3d 22nm is going to replace iSeries for tablets and be able to power smart phones.

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