Will Intel Have Its Cake and Eat It, Too?

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To be perfectly honest, I've had trouble joining the netbook craze. Though their popularity is undeniable -- millions of consumers have picked one up to act as an ultra-portable, inexpensive complement to their primary notebooks -- the devices have looked and felt too much like glorified toys for my taste. Sure, the logos might say Acer, HP (for Hewlett-Packard (NYSE: HPQ  ) ), or Dell (Nasdaq: DELL  ) , but with their tiny displays and underpowered processors and graphics chips, I half-expect them to say Fisher-Price.

I'm sure that Intel (Nasdaq: INTC  ) has heard its share of critiques about netbooks that fall along those lines, and the company's hoping that its latest Atom processors, named Pine Trail, will help counter them. The Pine Trail processors provide more computing power than the N270 and N280 Atom chips used in many netbooks today, and they also improve on their predecessors by integrating a graphics processor and memory controller, instead of having these features handled by separate chips. A minor upgrade to the Atom, this isn't.

The higher integration found in the Pine Trail platform should lead to lower netbook component costs and higher battery life. But Intel seems most interested in touting the performance benefits of the platform, and it's hard to blame it. While netbooks running the N270 and N280 have proven adequate for basic Web browsing and productivity tasks, they've also had their share of problems dealing with multimedia tasks. Try getting your average netbook to play a high-definition Web video clip or any half-decent 3-D game, and chances are it'll stutter more than Woody Allen.

Pine Trail might not turn netbooks into multimedia powerhouses, but from the looks of things, it should cut down on such frustrating experiences. And in doing so, it could add more fuel to the netbook boom and do a number on graphics and motherboard chipset rival NVIDIA (Nasdaq: NVDA  ) , which has high hopes for its Ion platform.

The problem for Intel is that the Pine Trail chips might be a little too good. We've already seen Atom chips used in a handful of low-power desktops and servers. Thus, it's not farfetched to see the latest chips, with their superior multimedia performance, start to be used in bigger, more conventional notebooks. Makers of conventional notebooks in the "thin and light" category could easily be drawn to the Atom because of its low-power capabilities. And if they are, there's a good chance that the Atom would displace a more expensive Intel notebook processor along the way.

If that happens, then Pine Trail's "success" would be just the latest shoe to drop in a decade-long problem for Intel and Advanced Micro Devices (NYSE: AMD  ) . While Moore's Law and improvements in chip architectures have led to massive gains in processing power, software demands simply haven't kept pace. You just don't need Intel and AMD's most powerful chips to run the latest version of Microsoft (Nasdaq: MSFT  ) Word -- or for that matter, to play a high-definition video clip. And as a result, consumers and businesses have become more and more willing to settle for less when it comes to PC microprocessors.

In the case of Pine Trail, however, this could mean that buyers of low-end conventional notebooks will "settle" for chips that cost only $43 to $63. Even for a company as experienced in dealing with average selling price declines as Intel, that could be a tough pill to swallow.

Care to disagree, or have other thoughts on Intel's netbook strategy? Sound off in the comments section below.

Fool contributor Eric Jhonsa doesn't own shares of companies named above. NVIDIA is a Motley Fool Stock Advisor selection. Dell, Intel, and Microsoft are Inside Value selections. Motley Fool Options recommends buying calls on Intel and a diagonal call strategy on Microsoft. Try any of our Foolish newsletters today, free for 30 days. The Motley Fool has a disclosure policy.

Read/Post Comments (6) | Recommend This Article (9)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 30, 2009, at 4:00 PM, doublewitch wrote:

    It's articles like this that keep me from buying any

    Motley Fool programs. You guys are some research.

  • Report this Comment On November 30, 2009, at 4:15 PM, Fool wrote:

    I agree, who in their right mind would run an Atom processor in a server? And the only reason NVDA isn't cleaning up with the ION is because of more Intel price fixing, this time on it's processors v chipsets.

  • Report this Comment On November 30, 2009, at 6:03 PM, TEBuddy wrote:

    Its not hard to beat the performance of an Atom processor, or the graphics on their platforms. Nothing to be too happy about yet. And I cannot believe anyone would use an Atom in a desktop, my P8400 isnt even snappy in Microsoft Office or other programs.

  • Report this Comment On November 30, 2009, at 6:19 PM, TMFRhino wrote:

    Hi Fool,

    For an example of using Atom processors to power servers, look here:

    One example would be the company SeaMicro. I'm not the author and don't want to speak for him, but the point isn't really in servers though.

    I think its silly to not acknowledge the threat of Intel cannibalizing sales that would have formerly gone to higher margin and revenue items. Not that low-end processors don't present their own opportunities, but there is a threat to their future growth.


    Eric B

  • Report this Comment On December 01, 2009, at 5:39 AM, woodydewar wrote:

    You mention 'The Netbook Craze', like somehow netbook owners are mentally inferior. You also mention that netbooks are like toys and not serious computers for adults.

    Actually, Netbooks became a huge threat to Microsoft in September 2008. That's when Microsoft tried to kill XP and force everyone to buy computers with Vista instead. Most computer owners hung onto their old XP systems for dear life and just said NO to Vista.

    Then, sub $400 Linux Netbooks started to gain popularity. Mine was advertised at $299 with Ubuntu Linux for example. If you can't have XP, and Vista is too bloated, then Linux was the only other alternative. Linux Netbooks were gaining popularity and Market share.

    By March 2009, Microsoft was forced to bring XP Home Edition SP3 back from the grave. Windows Vista's system requirements exceeded the hardware capabilities of most Netbooks. Bringing back XP was the only way Microsoft could prevent losing even more market share to Linux.

    Not only was Microsoft losing market share, but Intel Celeron processors were also losing market share to Atom processors. Netbooks scared the hell out of both Microsoft and Intel. Microsoft and Intel responded with the 'Maximum System Requirements for Netbooks' conspiracy. That's why today you don't see $350 Atom N330 dual core Netbooks with 2gb of RAM, 11 inch screens, 250gb hard drives or 32gb SSD drives.

    Meanwhile, Windows Vista has less than 19% market share almost 3 years after it's release.

    You call these Netbooks 'stupid' or 'childish'. I call them Revolutionary. The Netbook Revolution sure kicked Microsoft and Intel in the butt! Netbooks are here to stay and they are a serious part of the computing industry.

  • Report this Comment On December 04, 2009, at 11:00 PM, boeddd wrote:

    I know about the graphics and the power consumption but I'm concerned about SPEED a bit more. I just set up a Vaio X laptop for a client and it was very sleek but too slow at 2GHz even using and SSD hard drive. Any news on faster atom procesors or 64bit Atom processors? I heard the new pine view atoms are only going to be 1.6GHz and 1.8GHz.

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