I presume that a commercial design will use the pinky nail size processors in some kind of blade architecture (is blade 2006, what do you use now, leaf? snowflake?), but for a test setup I suppose they could be using a cupboard filled with actual netbook computers?? (Running Windows XP? Puh-lease.)

The dual core variant of atom has 2 threads per core totalling 4 threads per CPU. How is this single threaded?

Remember good old Transmeta?? With the low-power processors like Crusoe and Efficeon? While they were mostly targeting the mobile segment, if you could read their announcements and intensions, one of their goals was clearly the high density servers.

There has even been a company - Orion systems? if I remember correctly the name - that had presented a desktop-like workstation system that was using a great number of these processors in a form called Computer Workstation Based on Cluster Technology. From a quick search I found this announcement - http://investor.transmeta.com/ReleaseDetail.cfm?ReleaseID=142300 but I'm pretty sure that I had even read on TheINQ about this.

Furthermore, have you seen the mainframes / supercomputers from IBM that sport the small PPC 4xx processors?

It's alright if you are Microsoft and can afford all of the software licences. I suppose you could use Linux though...

And I do recall looking at VIA based 1U servers at one point for low power, high density racks in a similar vein. And wasn't there a hosting company that used Mini Macs in a similar way? So this is not exactly a new idea.

Does this mean that Microsoft will now optimise their software and remove bloat? Could we have a version of Exchange that ran on a dual processor, dual core, Atom-based server? Would be good to see, as having power-efficient hardware is only half of the story if the software runs the processor at 100% utilisation on a permanent basis... Green software anyone?

I'm what is referred to as a Distributed Computing addict, which means I enjoy contributing power(computer cycles) to researchers who need to use a lot of crunching power on some relatively small amounts of data. While many people simply attach Internet-connected computers to various projects to donate power, some people actually go out of their way to specifically build computers for Distributed Computing purposes. Since these computers tend to run 24/7 at 100% cpu usage, the amount it crunches for a given amount of power becomes very important.

It would be interesting indeed, not to mention embarrassing for many DCers, to discover netbooks(or laptops for that matter) crunch more information for a given amount of money.

While it makes sense to use low power processors, the Atom was designed for minimal power consumption mainly by lmiting the number of threads. It's ideal for netbooks, but the impact of being single-threaded shows when you're loading a complex website or running multiple applications. Using more conventional notebook processors, such as mobile Cores makes more sense than trying to shoehorn a processor that was designed for an entirely different purpose. Heck, one can even build a datacentre with several Core Duo Thinkpads and achieve the low power consumption goal.

...why the Zune social and marketplace are soo god damned slow.

Actually,Microsoft powers data centres with "internet centric, affordable computers" according to that article, not netbooks - which of course refers to a registered Psion trademark ;-)