Atom: A Building Block For Intel

The much anticipated MPU designs from Intel, Silverthorne and Diamondville, have been announced by Intel. The MPU will be marketed under the brand name Atom. The MPU is a single core 80x86. Atom is a new low-power microarchitecture. It represents a new family of processors designed from the ground-up for low-power and performance and is manufactured on 45nm process.

Intel is targeting a different class of processing from its mainstream processors, Core 2 Duo. Atom and its accompanying chipset are relatively lower performance than Core 2 Duo but power consumption is considerably lower as well. Atom is not intended to compete with Core 2 Duo.

You may have heard the term Mobile Internet Device (MID) from Intel. This is not a new market. It is a new marketing term Intel has coined. It encompasses many of the current mobile devices on the market. If it is portable, has wireless communication, computing features and fits in your pocket it is an MID. This would include smart phones, the iphone, Personal Media Players (PMP) with wireless, GPS with internet connectivity, etc. The screen size would be 4.5 in to 6 in. A yet to emerge ultra-mobile PC (UMPC) has a screen size of 5 in to 7 in. Most would run Linux, but are also capable of running Windows. Essentially this is the market for convergence devices we have been discussing for several years. Intel will begin shipping Intel Atom processors soon, with MIDs to start appearing in Q2 2008.

Intel is also combining the Centrino brand name with Atom. Centrino is not a processor but a platform definition. In the case of Atom, a product will be labeled “Intel Centrino Atom” if it has the Atom MPU with an Intel chipset and wireless connectivity. This wireless connectivity can be WiFi and/or WiMAX. It might include other wireless standards. Intel’s platform architecture enables customers to chose from a range of connectivity options – WiFi, 3G and/or WiMAX – based on their specific geographic needs. Intel is a major proponent of WiMAX. Centrino Atom branding includes a requirement for “pocketability”.

In addition, Intel is proposing new PC market segments – netbooks and net-tops. These are low-cost and compact versions of the notebook PC and desktop PC respectively. The products in these categories would have lower performance than the “standard” PCs, but lower power consumption and lower cost. For example, a netbook is a still a “clamshell” design, but with a screen size of 10 in or smaller, and a target price of range of $250 to $300 over time. The focus of these new computing categories is Internet centric content consumption. Low-cost netbooks and nettops will be available starting in Q3 2008. Asustek has announced a netbook. Other vendors are expected to announce net-tops later this year.

Semico Spin

The term MID may seem like marketing hype at first. By coining the term some people may see this as self-serving on Intel’s part. However, it does provide a large umbrella that covers what are currently separate markets which are constantly evolving. As an industry we have been debating for almost a decade what to call these products that are adding similar features. “Convergence” has been used but without a good marketing push. Go to Best Buy and ask for the portable convergence section.

Semico sees Atom in this MID segment competing directly with ARM-based devices. In this case Intel is not the 800-pound gorilla. A couple of years ago Intel sold its XScale product line to Marvel. XScale is an ARM derivative that was developed from StrongARM. Intel has chosen a different path for this market. It remains to be seen how Intel Atom will do against such a well entrenched architecture.

The netbooks may see some sales in 2008. Semico estimates on the order of 1 million units. If this new design catches on in emerging markets as well as budget minded consumers in mature markets, by 2012 Semico foresees that netbooks could be shipping on the order of 20 million units or more.

What does Intel gain with Atom? If Intel achieves a modest penetration rate into the MID segment and netbooks grows in line with Semico’s estimates, the company could conceivably add $2 to$3 billion to its annual revenues. That would be great for a lot of companies, but it would be small percentage for Intel. In 2007, Intel’s gross revenues were $38.3 billion.

Intel’s cash cow is the 80x86 MPU which accounts for roughly two-thirds of its revenues. The notebook segment is the fastest growing area. How does one keep this market growing? Even if Intel offers more powerful MPUs with more cores at lower prices, will the consumer see the difference? These MPUs need to be fed more data. That means increasing wireless broadband availability. But the service providers want to see more customers for this service. By promoting WiMAX and other wireless standards with low cost portable devices, the infrastructure for wireless broadband can grow. This will make future generations of notebook MPUs more desirable.