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Netbooks no longer appeal to first time buyers says Intel

The world of microprocessors is dominated by Intel with secondary players like AMD coming in far behind. Intel helped to usher in the era of the netbook with its wildly popular Atom line of CPUs and still has little in the way of competition.

Intel has announced that it sees the netbook market shifting. The company said that it no longer expects netbooks to appeal to first-time buyers. Intel says that it sees netbooks as a secondary computer for users or an option for kids needing their first computer.

Intel's Sean Maloney said at a media event, "I don't think first-time buyers are going to buy netbooks. The first time you buy something you want the real deal. It's consistent not just in China, but all around the world. If you're going to spend your hard-earned money for the first time, you're going to put a computer in your house."

Maloney said that he doesn't see the trend of netbook sales changing soon. The machines have traditionally sold to users with one or two PCs in the home already. He also adds that the market for kids 7-11 years old is underserved. Disney for instance is offering a netbook for kids that is festooned with Disney characters and software right out of the box.

EWeek reports that Q2 revenues for Atom processors and chipsets spiked 65% from the first quarter to $362 million. This was also the quarter where Intel had to pay the massive EU fine, which it is appealing. Intel also still maintains that netbooks will allow new people to be introduced to computing, which is particularly important in emerging markets. Netbooks, according to Maloney, are now a well-established market.

He said, "There is a new category established. That category is, to an extent, maturing. It is not so much in the early phases."

Much of the netbook focus isn't on the U.S. market with the economy still in a recession. Intel says that it sees the economy in areas like India and Brazil improving.

He says, "If you are dependent on the U.S. consumer, or U.S. business alone, obviously you are in one box. If you are global, you're in another. There are a number of countries, Brazil included, that actually seem to be coming back pretty quickly."

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Intel bleeds from the ATOM.
By fteoath64 on 8/1/2009 8:06:11 AM , Rating: 2
At such a low price for ATOM systems, the margin is just razor thin. For each laptop sold, Intel wished it could have sold a C2D CPU, and now they wanted to "shift" away because they needed the margins to maintain they business going forward.

This is one of the reasons AMD and VIA did not get into this market at all, to all our surprise. They don't want to bleed becuase they cannot afford to. Yes, there is a market but at margins that are not business worthy at all. So why do that ?.

Look at why Intel is so hesitant to scale the Atom to 2.0Ghz, 2.2 or even 2.4Ghz speeds. That will hit the C2D market bad even though the ATOM would be slower in actual speed. Theses machines are hovering around $1000 mark and would be hard pressed to "slash & burn" towards the $400 mark. Yeah, ATOM is a game-changer but it is not sustainable, so the sole producer is going to kill it. Simple.

If AMD and VIA wants to go for the $500-$600 market when the $400 and below market dries up, then good. Intel will likely drop prices of 1.8Ghz, 2.0 Ghz C2D to compete.

"We’re Apple. We don’t wear suits. We don’t even own suits." -- Apple CEO Steve Jobs
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