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End is in sight for Intel's Atom netbook-specific processors

Agam Shah | April 12, 2013
Intel's Atom processors designed for netbooks could be on their last leg, with analysts saying that the chip maker could be tweaking its product road map as PC sales tumble and tablet adoption widens.

Slow netbook sales were partly responsible for the 13.9 percent year-over-year fall in PC shipments during the first quarter this year, IDC said this week. Netbooks are now a small niche market with an audience in developing countries, said David Daoud, research director at IDC.

Intel is likely to replace its netbook processor lineup with the Bay Trail chip or the low-end Celeron chip, which is for entry-level laptops, said Jim McGregor, principal analyst at Tirias Research.

"I would expect they are not going to announce another netbook processor," McGregor said.

Netbooks were an artificial market created partly by the global economic crisis, and the low-cost laptops resonated well with price-conscious buyers, McGregor said. But over time, weaknesses in netbooks -- slow performance, cramped keyboards and small screens -- were exposed.

"Users want a tablet or a more fully functional notebook," McGregor said, adding that an entry-level laptop with more features costs just a few dollars more.

PC designs are also changing, and Intel is trying to put the term "netbook" in the past, McGregor said. For a product like Bay Trail, Intel "will not call it a netbook processor," McGregor said.

If users want $250 computing devices, they can buy Chromebooks, which come with ARM or Intel's Celeron processor, or cheap Android tablets, said Mercury Research's McCarron.

Low-cost Android tablets are available with ARM or Intel's Atom smartphone processor variant code-named Lexington. Chromebooks start at $199. Also, the Windows 8 OS does not work on the latest Cedar Trail netbook chip.

Intel is trying to keep up with the times and future Atom chips like Bay Trail could perhaps be a natural successor to the company's netbook chips.

"It's a transition phase, give it some time and let the economics of scale come into play. We'll see some kind of stronger improvement of these devices," McCarron said.

But as Atom netbook chips fade away, the category is being taken over by Advanced Micro Devices' Brazos chip, which is closely related to markets that netbooks played in, McCarron said. The Brazos chips have sold well through products like HP's Pavilion DM1Z laptop, which has an 11.6-inch screen.

"There's a battle that's breaking out there," McCarron said.

Atom processors are also in smartphones, tablets and servers. Atom chips are also selling well in embedded devices.


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