Intel Looks to Tiny Atom Processor for Profits in the Face of Slowing PC Sales

Logo IntelWhen Intel launched its tiny Atom processor, it intended for the small, low-cost CPU to find its way into many cheaper consumer electronic devices like the new class of netbooks, mobile phones, and Mobile Internet Devices (MIDs). Intel's Atom has found its way into a number of small, lower-cost devices so far since its launch including the Asus Eee PC, MSI Wind, and Acer Aspire One.

Intel is looking to the low-cost Atom processor to help it grow its business and profits in the face of a slowing trend in the PC market. According to Intel Chief Financial Officer Stacy Smith, the Atom CPU is doing very well. Reuters quotes Smith as saying in an interview, "Atom is off to a very, very rapid start, far exceeding our expectations when we started the year. It's the perfect recession product to have in the marketplace."

According to Intel, the Atom processor is well placed for the mobile market and emerging markets. The low-cost nature the processor makes it desirable as the CPU to be used in low-cost secondary computers or in low-cost systems aimed at children. Smith does maintain that Intel won't know the complete size of the market for the Atom processor for about six months. Smith also says that the Atom processor seems to be growing the market rather than cannibalizing existing PC sales.

The much lower price and lower performance of the Atom CPU compared to Intel's more common Core 2 processors has Intel saying that it is not worried that the Atom processor will cannibalize existing CPU sales, with the possible exception of low-end Celeron sales. However, Smith told Reuters that the Atom could cannibalize low-end Celeron sales and that he was all for that.

Smith said, "If it's [the Atom] cannibalizing from the Celeron part of the market, I'll take that any day." Reuters also reports that Smith maintains Intel would be able to meet its third-quarter predictions of $10 billion to $10.6 billion in overall revenue.

Intel has offered no insight into its profitability from the Atom processor, but Smith did say Intel is able to get 2,500 Atom processors per silicon wafer. According to Reuters that should mean Intel makes a healthy profit on its Atom processors. Intel is also looking at the embedded market is a serious marketplace for its Atom processor.

Smith says that interest among embedded customers for the Atom processor has been very strong. He does point out though that it could take years for Intel realize revenue for the embedded market because of longer design cycles. Intel does say that once the Atom has been designed into a car or cable box the processor would remain there for years.

Intel has been aggressively introducing new models in its Atom CPU line since the initial introduction. In April, Intel announced five new Atom models and more models are on the way.

Source: DailyTech

Tags: Atom, Intel

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