Intel CEO Otellini says netbook market on the rise

Intel says tablets won't bite into netbook shipments

Demand for netbooks is stabilizing and is poised for growth as consumers start purchasing the devices as primary PCs, Intel CEO Paul Otellini said on Tuesday.

Netbook shipments will grow north of 20 percent as PC shipments continue to increase this year, Otellini said during a speech at the company's investor meeting being held in Santa Clara, California, which was also webcast.

Netbooks were initially viewed as a secondary device for consumers, but are now becoming a primary purchase for some audiences in emerging markets, Otellini said. In Mexico, about 53 percent of the laptop purchases were netbooks in the fourth quarter of 2009, Otellini said, citing data from IDC. A lot of those purchases were made by first-time PC buyers, he said.

"That phenomenon may replicate itself in places like India as the prices come down," Otellini said.

The company develops the Atom processor for mobile devices including netbooks, which are low-cost laptops characterized by small screens. After close to two years of accelerated growth, the initial euphoria around netbooks has started to subside, raising questions about the Atom processor and how long Intel can sustain demand for the device. Despite the low prices, netbooks have attracted criticism for poor performance and limited graphics capabilities.

Intel's Atom processor for netbooks represented 20 percent of Intel's mobile PC processor shipments during the first quarter of 2010, according to an IDC study released last month. iSuppli last week said netbook shipments are projected to be 34.5 million units in 2010, up 30 percent from 2009. Total PC shipments are expected to be about 209.5 million units this year, an increase of 25.5 percent year-over-year.

Intel is now planning to build performance improvements into its Atom processor line in an attempt to sustain demand. The company has said it will build DDR3 memory controllers into Atom, and also has hinted at a dual-core version of the netbook processor.

The company is also pushing the Atom processor into new areas like tablet computing devices and smartphones as it tries to enter high-volume areas to boost revenue. Tablets are a growing segment, Otellini said. Many have argued that tablets would eat into the sales of netbooks, but Otellini disagreed.

"A tablet is fundamentally a consumption device," Otellini said. Other devices like netbooks, laptops and desktops are content creation devices, and tablets won't take market share from those devices, he said.

Intel took a step ahead when it last week announced a chip package based on the Atom Z6 series processors that will go into mobile devices like smartphones and tablets. Chip rival Arm has an early edge in the tablet market, with computer makers using the company's processors to power tablets. Apple's iPad, which started shipping in April, is powered by an internally developed A4 chip based on an Arm processor. Dell and Lenovo have shown tablets based on Arm designs.

The company sees video as one way to boost adoption for its mobile chips. Otellini said more and more people are spending time watching video on devices, and Moorestown is the first mobile chipset capable of playing back 1080p video on smartphones, Otellini said.

Intel offers wireless display technology called WiDi in its laptop chips, through which users can wirelessly transmit multimedia content from laptops to TV screens. Otellini said it would extend WiDi from laptop processors to its chips for "all platforms" in the next few years, without specifying details.

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