Sales of netbooks, which were growing rapidly in 2008 – 2009 timeframe, are slowing down and Intel Corp.’s revenue associated with Atom processors dropped by nearly one fifth in the Q1 of FY 2010. However, Intel believes that by improving performance of Atom processors the company will catalyze demand for netbooks in future. The only question is whether those devices will be similar to what we know today.

“I think there will still be significant growth in the netbook business year-over-year. I think that there are rather than pricing, I think, we would look to features and integration as a technical novelty or twist here. The next innovation coming out on Atom is dual-core, which comes out in the second quarter, so that it will ramp for the holiday season this year and I think that will be a very attractive product,” said Paul Otellini, chief executive officer of Intel, during the most-recent conference call with financial analysts.

In the second quarter of fiscal year 2010 the world’s largest maker of chips said that Atom microprocessor and chipset revenue were $355 million and were down 19% compared to the previous quarter. This happened as PC client group revenue was flat, while the mobile microprocessor revenue was record, something, which clearly indicates that the demand towards Atom processors shifted to higher-performance Intel products in Q1 2010.

One of the ways to rejuvenate sales of Atom is to lower pricing of the chips and make systems even more affordable, even though it will hardly help in the longer term. Another way to revitalize demand towards Atom-based netbooks is to improve its performance or feature-set and it looks like this is exactly what Intel plans to do.

But higher-end Atom chip will catalyze computer makers to install more advanced components too, which will increase their costs. However, will netbooks based on dual-core microprocessors that run Windows 7 operating system and feature a vast amount of memory along with a large hard drive accompanied by a high-quality screen resemble today's low-cost netbooks? It looks like not exactly. As a result, the only difference between notebooks and netbooks will be performance of central processing unit, which is likely to make such systems actually less desirable since the difference between the price of a notebook and a netbook will be negligible, but the former will provide better experience.

The first rumours about dual-core Intel Atom products for netbooks emerged in early March. It was reported that Intel planned to release N500 microprocessor, which would likely be based on Pineview design, feature have an integrated memory controller as well as built-in graphics core. The chip is currently projected to sport two physical cores along with Hyper-Threading technology. Its clock-speed and thermal design power are not known.

Tags: Intel, Pineview