Intel had to hustle to catch up with competitors in developing chips for mobile devices like smartphones, but the effort led to the development of the highly successful Atom chip, a company executive said on Wednesday.

Today, the Atom chip is being used in most netbooks, which are low-cost devices characterized by small keyboards and screens ranging from 7 to 12 inches.

Netbooks are designed for Internet access and to run Web applications.

Intel kicked off the Atom project in 2004, when it was doing work on developing Arm chips in parallel, said Sean Maloney, executive vice president at Intel, at an event in San Francisco.

At the time the company was "running like crazy" to develop a chip for mobile devices to catch up with the fast evolution of wireless devices, especially voice services, which were peaking at the time.

Intel partly unloaded its lineup of Arm-based processors when it sold its communications and application processor business to Marvell in 2006 for around $US600 million.

Atom was focused on wireless data-related services, as Intel believed wireless carriers would focus more on their untapped potential in the future.

Intel worked with Asustek Computer at the time to develop Atom chips. Asus had a similar idea of developing an inexpensive device drawing low levels of power and providing quick Internet access.

Asus in 2007 ultimately launched the first netbook, Eee PC, and close to 350,000 units sold that year.

Netbooks finally started reaching a wider range of consumers in 2008, especially in emerging economies like China and India.

Though companies like Apple and Advanced Micro Devices have dismissed netbooks as having limited hardware and software capabilities, the devices have attracted a lot of attention due to their low cost and small size.

Worldwide netbook shipments reached 10 million in 2008, with shipments expected to touch 22 million in 2009, according to IDC. Research firm DisplaySearch estimates worldwide netbook shipments will reach 32.7 million units this year.

Intel's work in defining and explaining the netbook category isn't yet over, Maloney said.

"Netbooks are so far a second or third purchase for somebody who has a notebook," Maloney said. He has seen people whipping past netbooks in rural China to get to laptops. "First-time buyers won't buy netbooks," he said.

Going forward, Intel aims to further decrease power drawn as it puts Atom chips in smartphones and embedded devices.

For example, Intel is developing the Moorestown platform for mobile devices that draws up to 10 times less power than current Atom chips in idle mode. The platform is set for release in early 2010.

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