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Intel results: Atom bomb blows hole in Q4 earnings

The growth in the use of cheap portable processors in notebook computershas contributed to a decline in revenue at chip-makerIntel.

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The growth in the use of cheap portable processors in notebook computershas contributed to a decline in revenue...

at chip-makerIntel.

Intel reported a drop in its fourth quarter 2008 revenue of 20% compared to Q3 2008, a sign that the company's cheap processors may be detracting fromits high-end processor business.

Intel'shigh-end processor, the Penryn Core 2 processor is used in notebooks, but the company has also been building a business manufacturing its low-cost Atom processor to power cheap netbook devices such as the Asus eeePC, Lenovo S10, Dell Mini Note and Hewlett-Packard 2133 Mini Note.

Robert Castellano, president of market research firm, The Information Network, said, "High margin CPU's (Core 2 duo/Quad-core etc) will take a beating if netbooks proliferate upwards through the value chain. Intel achieves phenomenal yields on Atom, which makes the Atom's cost basis very low. There are margins there - which on an aggregate will be high due to the volume play. But Atom will cannibalise sales in the volume and performance segment."

Some industry experts believe people will buy the lighter, lower cost netbook devices over fully-fledged laptops and notebooks, because they offer most of the benefits of laptops without the cost and weight premium of a laptop device.

Netbooks will be among the hot gadgets on show at this year's Consumer Electronics Show in Las Vegas. Analyst firm ABI Research expects consumers to but 140 million netbooks in 2013, a massive increase compared to the 15 million sold in 2008.

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