Intel to Push 'Thin Is In' Notebook Refresh

Intel's chief marketing officer pledged that the company will go through "a major refresh" of its volume notebook line, pushing consumer-class ultra-low-voltage processors into notebooks to create a new tier of consumer computing.

The disclosures were made at Intel's investor conference at its Santa Clara, Calif. headquarters, where executives presented both a product and financial update.
Intel has been closely watched as both a bellwether and a company that has spoken frankly and optimistically about industry conditions. Intel chief executive Paul Otellini did not disappoint. Otellini said he was "increasingly comfortable" with the belief that the PC market will not dip as far down as some analysts believe. Gartner, for example, expects PC sales to drop 9 percent in 2009; the actual drop "might not be as bad," he said.

A shift to 32-nm technology, growth in software, and the scaling of Intel's products into new markets will help Intel continue to grow, Otellini added.

Intel's investors conference was scheduled roughly a week before its shareholder meeting and a day before the European Union is expected to levy fines and/or sanctions against the chipmaker for anti-competitive practices. Executives disclosed little news during the afternoon's sessions, instead trying to paint a comprehensive view of a company whose products have become increasingly complex as Intel has wormed its way into more and more sectors of the market.

On Tuesday, IDC also reported that Intel's market share in dropped 4.7 percent in the fourth quarter of 2008 to 77.3 percent during the first quarter, while AMD increased its share to 22.7 percent by roughly the same amount. Worldwide PC processor unit sales dropped by 10.9 percent, while revenue dropped 11 percent. Year-over year, units dropped 13 percent, while revenue plunged by a quarter. IDC did not report actual revenue and unit numbers.

Traditionally, Intel has manufactured microprocessors for notebooks, PCs, and servers, all using variations of the same technology. That same strategy is largely in place, but Otellini said that Intel sees roughly a $10 billion opportunity in the consumer electronics industry, the embedded market, handhelds, and low-cost PCs. Combined with Intel's existing business, the total is potentially a billion units per year; Intel serves a third of that. Next year, that opportunity could double, he said.

Thin is in

The same segmentation that is evolving the desktop PC away from "big, boring and beige," in Otellini's words, is also affecting the notebook market, where Intel has tried to capitalize on the shift toward notebooks. The problem of late has been that the recession has encouraged buyers to move toward lower-cost consumer notebooks and netbooks: a prop for unit sales, but challenging for profits.

The bright spot, however, came with the MacBook Air and its rivals: suddenly, "thin became in." said Sean Maloney, Intel's chief marketing officer.

From the middle of the year onwards, Maloney said, Intel plans to introduce a major refresh oriented around its Penryn ULV and Cantiga GS/ICH9-M SFF platform, designed to reduce the footprints within the notebooks from an average of 3342 sq. mm to 1415 sq. mm, without doing the same to their profit margin.

"We think it's going to be a big deal, a big deal for consumers, with lots of exciting products coming out," Maloney said. The new chips will also provide an opportunity for upselling consumers: "we can reach a new price point and be paid for it," he said.

For a long time, Intel and others treated ultra-low-voltage parts as a premium option: "you could go fast, or you could go thin and light," said Dean McCarron, principal analyst with Mercury Research. Atom, however, is a low-cost thin-and-light processor.

There's been pressure to creep up the 10-inch screen size to something akin to a 12-inch ultraportable, something that Intel doesn't want to happen, McCarron added. A CULV part can run fast at a lower voltage, and raise the price of the laptop; McCarron said an $800 price point would stimulate demand.

Meanwhile, the Atom continues to move down into the embedded space, said David "Dadi" Perlmutter, the general manager of Intel's Mobility Group. Intel has begun 1,500 design engagements, with 300 design wins and 100 more in actual production, most with new customers that have never engaged with Intel before, he said.

Intel's shipments of Atom processors for mini-notebook PCs declined 33 percent in the first quarter of 2009, indicative that OEMs held inventory, IDC found.

Intel also continues to push its processors into system-on-a-chip designs, Otellini said. In one intriguing aside, Otellini said four major games had been ported to "Canmore," a system-on-a-chip for a set-top box or TV, within a matter of days. Later Tuesday night, Intel will demonstrate those games running on the hardware inside a Canmore TV, and not a set-top box, he said.

Intel also continues to push harder into advanced manufacturing, having announced the beginning of the shift to 32-nm manufacturing at the end of 2008, a transition that should be completed by the end of 2009. According to data Otellini presented by IBS, only four other companies will join Intel with its own 32-nm fabs: IBM, Samsung, ST Micro, and Toshiba. IBS predicts that Toshiba and IBM will drop out by the 22-nm generation; however, GlobalFoundries, the spinoff of AMD's manufacturing division, was not listed at all.

The final pillar of Intel's success? Software. Intel executives showed off what they could expect from Larrabee, Intel's first discrete graphics chip in years. Intel also expects to release the beta of Moblin 2.0, a Linux based platform for netbooks, next week, said Renee James, the general manager of Intel's software and services group.