Intel wants piece of tablet, netbook action

Chip maker creates business unit to serve emerging computing devices

Rather than accept the prognosis that the emergence of low-cost, underpowered computing devices spelled doom for its business, chip maker Intel is moving to capitalize on the emergence of netbooks and tablets.

Of course, it remains to be seen if the market can support both lightweight computing devices, but Intel will hedge its bets by placing chips, so to speak, on each.

(Also see: The imminent tablet explosion and Netbooks, we hardly knew ye)

As the New York Times Bits blog reports:

The chip giant has created a new business unit that it calls the netbook and tablet group. The unit will be run by Douglas L. Davis, the current head of Intel’s embedded and communications group, who will be charged with making sure Intel can fend off all kinds of competition in the burgeoning market for PC offshoots.

Bits quotes Intel spokesman Bill Kircos:

“Netbook shipments will be heading north of 100 million and we’ll all soon will find out what kind of market potential there is for tablets and these increasingly popular hybrid designs,” Mr. Kircos said. “ It makes sense for us to sharpen our focus on these friends of the PC.”

"Friends of the PC." It all sounds so nice and collegial.

While Intel has done well providing chips for netbooks, tablet devices may be a tougher nut to crack. Which could be a problem, because many people (myself included) believe tablets could relegate the once red-hot netbook to niche status.

According to Bits, Apple's ARM chip (which powers the iPad) is preferred by many tablet designers because it costs less (though also serves up less power) than Intel's Atom chip. Intel says more than 100 Atom-powered netbooks and tablets will hit the market by next summer, but I'm not sure what percentage of those devices will be tablets. We really are early in on this game.

In October, research firm Gartner predicted worldwide media tablet sales would reach 19.5 million units this year, eventually mushrooming to 208 million units by 2014. Meanwhile, despite Kircos's forecast for netbook shipments, Morgan Stanley in September released data showing the rate of sales growth for netbooks slowing this year, and actually going negative by late summer.

Chris Nerney writes about the business side of technology market strategies and trends, legal issues, leadership changes, mergers, venture capital, IPOs and technology stocks. Follow him on Twitter @ChrisNerney.

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