In early 2015, Intel (NASDAQ:INTC) launched its very first Compute Stick products. These devices essentially fit an entire PC into an HDMI stick. They packed the company's Bay Trail chips (based on the company's low-power Atom architecture) and were priced at $150.
HDMI-stick computing devices are hardly anything new, but such devices that could function as full-fledged Windows computers rather than just, say, specialized media playback devices (i.e., Fire TV Stick) were novel, to say the least.
However, when the reviews rolled in for this first-gen device, it was clear that Intel still had a lot of work to do in order to realize its vision for these products. Gizmodo, for example, told its readers outright not to buy the device, claiming it was difficult to use, had connectivity issues, was slow, and wasn't particularly portable.
Other reviews of the device from across the Web were quite lukewarm as well.
However, at CES 2016, Intel went ahead and announced next-generation versions of its Compute Stick devices. Will these be enough to impress customers and truly validate the concept of the Compute Stick? Let's take a closer look.
Compute Stick now in Atom and Core flavors
The prior-generation Compute Stick came packed with Intel's Bay Trail Atom chip, which was a good tablet chip in late 2013, but as a full-fledged PC processor in 2015, it's fairly lackluster.
The new Compute Sticks Intel is announcing come in three different variants. The lowest-end model comes with an Atom x5-Z8300, which is based on the company's 14-nanometer Cherry Trail architecture. This chip should allow the lowest-end Compute Stick to have significantly better graphics performance and improved performance per watt.
The Atom-based stick also reportedly comes with an Intel-designed 802.11ac solution, a much-needed improvement over the low-performance Realtek solution found on the prior-generation Atom-based Compute Stick.
What's far more interesting to me, though, is that Intel is now able to fit full-fledged Core m3 and Core m5 processors into the higher-end models, enabling significantly better performance. Intel has also managed to cram in four gigabytes of RAM and 64 gigabytes of eMMC storage (i.e., tablet class) into these higher-end Compute Sticks.
More powerful, more opportunity to upsell
With the added computing power and features in the low-end Atom-based model, I'd imagine the concept of a "cheap PC stick" is now a lot more viable. The Core m3/m5 based Compute Sticks are, in my view, the more exciting of Intel's refreshed Compute Stick lineup.
They're significantly more expensive than the Atom-based model (Core m3 model sells for $399 with Windows 10 pre-loaded; the Core m5 model for $499 with no operating system on board), but the increased performance should open up use cases that aren't yet viable with Atom-class silicon (advanced video playback and moderate PC-class gaming, for example).
The greater performance of the Core m3/m5 models also means they should just deliver a snappier overall experience in common real-world usage when performing tasks such as Web surfing. I'd expect the faster processor coupled with four gigabytes of memory (rather than just two) means the Core-based Compute Sticks should be much better for those who want to multitask.
At any rate, with Core-based Compute Sticks available, Intel can now potentially upsell customers from the cheap Atom-based sticks to the pricier Core-based sticks, ultimately helping to boost Intel's revenue and gross profit dollars.
Ashraf Eassa owns shares of Intel. The Motley Fool recommends Intel. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.