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Atom Could Challenge Intel's Higher-end Processors

The use of Intel's Atom chip in sub-notebooks could undercut sales of its higher-end chips, analysts said on Tuesday.

Atom chips are low-cost and low-power processors that mostly are being used in netbooks designed for Web surfing and e-mail. With Fujitsu's new LifeBook U820 tablet PC, introduced on Tuesday, Atom chips are now being used in laptops with small screens, packed with networking and multimedia features.

Tablet PCs usually feature Intel's more expensive Celeron and other dual-core chips, but using Atom chips in such systems could undercut sales of those higher-end chips, analysts said.

Other than the screen size, the U820 mini-notebook offers capabilities similar to those of traditional laptops. It weighs 1.32 pounds (598 grams), includes Bluetooth and 802.11n wireless capabilities, and has a built-in webcam and high-definition video decoding. It also has a built-in Garmin GPS (global positioning system) receiver for navigation. It can be configured with as much as 1G byte of RAM and includes a hard disk drive as big as 120G bytes, as well as solid-state drive options.

The U820 comes with a 5.6-inch swivel touch screen and runs the Windows Vista OS. A four-cell battery runs the tablet for up to seven-and-a-half hours, according to Fujitsu. Prices start at US$999.

The U820 is a mini-notebook targeted at consumers and mobile users looking for touch technology, said Kevin Wrenn, senior vice president of PC business and operations at Fujitsu. Atom's low-cost and low-power features were a consideration in adopting the processor for the laptop, Wrenn said. Upcoming laptops from the company with screens up to 12 inches will incorporate Atom, he said.

This laptop is the first of its kind running an Atom processor with this kind of advanced functionality, said David Daoud, an analyst at IDC. It is a sign that Atom-based devices are coming of age, and users looking for more functionality than what a netbook offers could adopt this ultramobile PC.

In an economic downturn, a PC with a low-cost Atom chip also could be more attractive over expensive alternatives, he said.

"That processor provides opportunity for reduced cost and cost avoidance during tough economic times," Daoud said.

Atom shipments are expected to witness healthy growth through the economic slowdown, IDC said in a study released on Monday. Atom shipments were good in the third quarter, totaling around 5 million units, IDC said.

For a tablet PC, the LifeBook U820 has an interesting price point, though the Atom processor's real appeal lies in its power savings over Intel's higher-end Celeron and Core processors, said Nathan Brookwood, principal analyst at Insight 64.

"Atom's low-powered consumption ... is like 10 watts. The lowest you'd ever get with Celeron or Centrino is 15-20 watts," Brookwood said. For a tablet PC, that is very impressive, and if it allows for a smaller battery, that's important, he said.

"I don't think you could build a tablet PC in that form factor with even a low-powered Centrino," Brookwood said. Laptops like Fujitsu products, with Atom, could cut into shipments of the lower-end processors, but the laptop is new and results have yet to be seen, Brookwood said.

Atom might bite into sales of Celerons first, followed by Pentium dual-core chips, which are on the lower end, said Dean McCarron, principal analyst at Mercury Research. With expenditure in check, people may instead opt for Atom-based systems.

"So far, there is not a lot of evidence that has happened, but it is certainly an area of concern," McCarron said.

The use of the Atom processor is evolving, said Bill Calder, an Intel spokesman.

"What you're seeing is an evolution of the category. We've seen some areas where [PC makers] have expanded and broadened the feature set," Calder said.

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