- Saturday, 28 November 2009
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A bore is a man who, when you ask him how he is, tells you - Bert Leston Taylor
Netbooks, Atom and a tale of Intel's diminishing profit margins
THE TERM "VICTIM of its own success" may also be an apt way of describing Intel's Atom, and possibly low-cost laptops and their components in general.
On the one hand, Atom has got to be the chip with the best timing on the planet, entering the market just before the world plunged headlong into an icy recession from which it still has a long way to emerge. The Atom is cheap, practical, could be bunged into low cost $300 nettops, and it sold. Oh boy how it sold (and continues to sell).
As people tightened their belts, cotchtops became the trendy option for the credit crunched amongst us, but this wasn't all good news for Intel, in fact, it would appear, far from it. Atom's phenomenal sales could be taking a chunk out of Chipzilla's more lucrative Centrino business and Intel seems to be responding by trying to reign in the Frankenstein like monster it has created. How? Well for one thing, it seems the chip's computing power, its MIPS and FLOPS, are not going to get a boost anytime soon.
At CES Intel admitted it would probably even bung Atom into lower power envelopes and even smaller form factors. Could it be Chipzilla is feeling the nip to its revenue and profit margins?
In all fairness, it isn't entirely clear whether or not Atom is in fact "cannibalizing" other, more profitable Intel products, but a good case can still be made claiming the diminutive chip is doing a spiffing job at making some of its more powerful CPUs obsolete. But, perhaps Intel still realises it's still a better option to cannibalize one's own products than let others in the market do it for it.
And it's not that others aren't interested. Netbooks currently make up the bulk of PC-market growth, in a slowing economy. The netbook space seems to be seething with interest, a fact which must be causing Intel some discomfort as its competitors start waking up and gaining ground.
People are opting to go for less CPU horsepower. They are realising that perhaps, just perhaps, they don't really need multiple cores and oodles of battery slurping power they don't need. Punters seem to have suddenly woken up to the fact that battery life and cost friendliness is actually rather more useful when deciding on a machine, and it's nice to be able to shove it in a handbag too.
But skimping on a CPU also doesn't necessarily mean sacrificing everything when it comes to user experience, and this is where graphic-processor makers start coming into play. Or, at least, Nvidia does.
Realising that it will take more than Cuda and a few personal supercomputers to make it through the recession, Nvidia has come up with a cunning plan to marry its 9400M chipset to the Atom to form the Ion platform, a significantly faster, more graphically pleasing netbook experience.
AMD is not convinced by the hype, telling the INQ it strongly believes "mininotebooks are not the right solution for everyone, as their performance, functionality, and usability is limited". Instead, the firm believes it's better off throwing in its lot with ultrathin notebooks and pursuing mainstream markets with superior margin opportunities.
The peeps down at DAAMIT reckon ultrathin notebooks allow for both integrated and higher performing discrete graphics along with a plethora of CPU options, including AMD's Athlon Neo (an old, single-core 65nm K8 microarchitecture) and Sempron brand processors, targeting various market segments and usage models within a single platform. Both these CPU options would have been considered a bad joke little over a year ago, but are now being taken very seriously indeed.
An AMD spinner told the INQ the firm would most certainly not "be going head-to-head with the Intel Atom processor which targets customers who are willing to sacrifice performance, functionality and usability for the smallest, most inexpensive notebook". She added the introduction of Nvidia's Ion platform confirmed the importance of bringing a richer graphics experience and more advanced multimedia capabilities to smaller form factor notebooks.
Via's Nano CPU is another serious contender to Intel's dominance in the smaller laptop market, and one which could foreseeably cause Chipzilla some real pain.
But Intel's spinners appear to be doing their best to appear unfazed. First off, according to spokeswoman Connie Brown, the firm claims it's "not seeing cannibalizing, but rather that they [Netbooks] are being added as secondary devices". She added netbooks were an "additional category" and would "not be the death of any of our other product lines".
This may well be true, but it will be interesting to see how long Intel manages to hold out before it lets OEMs bung Atom into more mainstream form factors, making the already fine line between netbook and notebook as good as obsolete.
Intel better just hope its CPU profit margins don't obsolete themselves or adopt a smaller form factor in the process too. µ
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i honestly think the analysts cant see where the financial slump ends and atom's market begins. people arent buying these things as anything other than supplementary systems to existing desktop or larger laptop hardware. ultra portability and low price is the main draw here. try and fit atom into a desktop format and marketed as a serious solution wont work, microsoft will make this certain with their bloatsoft(tm) OS OEM agreements. there is a potential massive market for atom, but its not going to hurt intel so much as modify their mobile platform strategy. AMD already admitted that they will not directly compete against atom - which is tantamount to rolling open the welcome mat for intel to utterly dominate this ultra portable market....
The atom is attempting to compete against risc and surprisingly, people are buying it. dammit understands risc processors are superior to anything x86 and is thus leaving that fight to intel.
I've seen similar commentaries on the web, though in fairness this is one that admits it's not sure how much cannibalization is taking place.
But folks need to understand the difference between PROFIT MARGIN and REVENUE. If ASP's diminish you will have lower revenue (unless you have higher unit volume to offset that); but it doesn't necessarily mean lower profit margin.
So if atom is "cannibalizing" the low end notebook market (like celeron?); it would likely IMPROVE Intel's profit margin due to the vastly lower unit cost of the atom vs the celeron (even though you are selling it for less money). If it is cannibalizing Core2 notebooks then there is the possibility it is eating into profit margins.
Regardless these simplistic analysis on this that float around on the web are amusing.
Netbooks are like overgrown PDAs. Most of the time they are supplementary to other, larger, computers.
It's fine for AMD to choose to prioritize for higher margins, but Intel is just expanding their product line into ultra-large handhelds, not cannibalizing their laptops.
Also, give AMD credit for directing Intel's attention to this new market as an outgrowth of the OLPC fiasco.
http://digg.com/hardware/Tom_s_Hardware_Atom_230_vs_Celeron_220_vs_Sempron_1100
Is it really possible that an AMD Sempron outperforms the new Intel by Atom by 43% yet only 4 watts higher in idle power
HP had already bunged Sempron into BT factor board mini-towers with (strangely) Nvidia, Vista basic, and then flogs it to rural grams for $200 or $10/month added to DSL connectivity charges over a year. Still a lot of dosh for an obit viewer; but it saves trees from the newspaper barons.
Sylvie makes a good point that we'll see more and more of diminished chip returns. "She drives me crazy
And I cant help [meself]"
Intel can't afford to throttle back its efforts too much. In this low-power space, it's competing against ARM, which is already firmly established. Anything Intel holds back will simply be ceded by default to ARM.
ARM doesn't run Windows, but then in this market segment that doesn't matter so much. Web browsing and other common Internet connectivity tasks work just as well on Linux. Or even better, because of its lower overheads.
Does any of you have a netbook?
No? try the MSI U100, once you tried it you simply love it.
Heck it replaces my desktop and big notebook most of the time.
Why? as it has a decend keyboard and screen and it's very portable.
The netbook like the U100 is here to stay forgood.
I'm with you on this.
I'm sure there's an application out there (weather forecasting?) that requires quad core processors on a desktop machine, but come on.
Most of the time a single core CPU is playing cards with its mates waiting for you to do something that causes it to get off its behind.
My AAO is a perfect little beasty, and annoyingly, although my main machine runs KDE 4.2 (RC to be precise) and I think it's beautiful, love it, want to marry it etc., Linpus, damn, is quite useful too.
As with so many things, once one has bought into 16 core 10 THz processors with 4 Petabytes zero latency RAM, in a sweet titanium and white gold case, it's a bit difficult to own up to only playing minesweeper on it.
AMD is missing the boat on this one. Netbooks are a new, growing market. They cannot afford to leave Intel do its own thing there. AMD could crank out a 45 nm chip with on-chip graphics and on-chip memory management that would blow away Atom. Why don't they? Netbooks and thin clients can take 100 million of these in a few years. In the age of Web 2.0 and server-centric computing, the CPU power of the client is almost irrelevant. It has been for several years already. The world is not going to Vista and not everyone is a gamer. There is a market for these more efficient chips and AMD is squandering an opportunity.
Sad.
Quote from the article "Connie Brown, the firm claims it's 'not seeing cannibalizing, but rather that they [Netbooks] are being added as secondary devices'." I know that an anecdote is not data, but this Xmas my friend and his wife both bought Samsung NC10s /WinXP(Atom based Netbooks), my other friend bought an MSI Wind U100 (Atom based netbook) /WinXP, and I bought my girlfriend an Asus EEE 701 /Linux (Celeron based netbook). br No one bought a laptop.
"But, perhaps Intel still realises it's still a better option to cannibalize one's own products than let others in the market do it for it."
I would have expected so much better writing from a Brit - maybe next time try something like:
"But, perhaps bloody Intel still bloody realises it's still a better bloody option to cannibalize one's own bloody products than let others in the bloody market do it for it."
The reason why I like my MSI Wind Netbook with the 1.6 GHz Intel Atom is that it can be powerful with the right kind of applications and games.
As you all know, all these new applications and games emerging from the market, are just damn bloated because they add new and uninteresting features to their product and they do no effort in optimizing their code for the application to run as efficiently as possible.
Games made on or before 2005 performs well in a netbook. My netbook performs at par with my 1.7 GHz Pentium 4 computer. The most common tasks, like ripping music and movies, can be performed by netbooks (although it is slower compared to modern laptops and desktops, it doesn't really matter because the difference is only a matter from a couple of seconds to a few minutes)
The problem with todays applications that they become so bloated. Games focus more on cheesy graphics and realism instead of replayability. Utilities add more bloat to their programs. A good classic example is Nero.
If you use the Netbook with the right kinds of applications and games, they are just as capable as modern PCs and Laptops.