It is a scenario dreaded by Intel, but the latest moves by its rivals point only in one direction - the cannibalisation of the notebook market by netbooks.
Whether it is chipmaker No. 2 AMD, No. 3 Via or latest entrant ARM, everyone seems to be heading for Intel’s jugular.
“We never believed in the term ‘netbook’,” says Arvind Chandrasekhar, general manager for business development at the India unit of AMD. The company is just coming out a tumultuous four-year period that started with its $5.4 billion acquisition of graphics chip maker ATI in 2006 and ended with the brutal downturn in the global economy last year.
Grappling with integration issues and multi-billion losses in year, AMD has been more or less out of action for the last three years when netbooks — costing half of what a notebook would — became a runaway hit.
Starting with the Taiwanese motherboard manufacturer ASUSTek in late 2007, all the major PC brands have embraced the category, which today accounts for about a fifth of laptop sales.
“We believe that there is a need for thin and light notebooks, but we are not sure whether they need to be put in a category called netbooks,” Chandrasekhar says.
Hidden in the anti-netbook assertion are AMD’s ambitious designs in the low-cost space and its understanding of Intel’s weakness. Intel, whose market share is almost seven times AMD’s, has fought to keep the netbooks off the notebook market.
If most consumers ended up buying netbooks with the $40 Atom chip instead of ‘regular’ notebooks with $200 chips, Intel would stand to lose a considerable amount of revenue.
When shipping its netbook-oriented Atom chips, Intel requires that manufacturers can put displays no larger than ten inches on such netbooks and the displays should have a resolution of no higher than 0.6 megapixels.
There is also a huge ‘product vaccuum’ between the Atom, which has 40 million transistors, and regular chips, which have nearly 400 million.
The result of the curious product positioning by Intel has been a plethora of netbooks that take care of nearly every need of normal computer-user, except play high definition web-videos or support gaming. Thus, if a user wanted to watch medium- to high-definition videos on Youtube, he would have to buy a full-blown notebook, instead of a netbook.
It is this business model that Intel’s rivals are targeting and going by the initial indicators, consumers are likely to be flooded with a plethora of video and gaming capable netbooks by the end of the year.
AMD fired the first shot four months ago, releasing its ‘Congo’ line of low-power processors and was followed by Via, which announced that netbooks based on its VX900 platform will support playing full high-definition playback, even web-based ones.
Three manufacturers have so far launched models sporting Congo — Lenovo, MSI and Asus while Lenovo and Samsung are expected to launch the first VX900-based netbooks by June this year.
The models, including those in the shops and in the pipeline, cost around Rs 25,000, or 25% more than Atom-based ones.
AMD and Via, however, still have one more challenge to meet, before they can turn the netbook market on its head — battery life.
A netbook based on the Congo platform will draw about 25 watt when in use, primarily because of the 15 watts consumed by the Congo chip itself. In comparison, an Atom-based netbook consumes 15 watts or less, giving it nearly 6 hours of life on a three-cell battery.
In comparison, the Congo-based MSI U230, which can play back a full HD movie to your LCD TV, runs out in around four hours on three cells.
However, Via, which has a history of designing low power processors, is expected to deliver comparable battery time to Atom-based netbooks when it launches high-def netbooks in 3 months.
AMD too will launch a more efficient version of its ultrathin processor in a few days, but its major leap is expected in early 2011, when it fulfills the object of the $5.4 billion ATI acquisition — the Fusion. The Fusion series will be a combination of ATI’s graphics chip and AMD’s core chip, on the same block and is expected to put AMD’s ‘ultrathin’ chips on par with Intel’s Atom as far as power consumption is concerned.
Another chip-design firm to watch out for is the Britain-based ARM. While primarily a cellphone chip-maker, ARM-based designs from Qualcomm, graphics chip maker NVidia, former Motorola unit Freescale and Apple will combine high-end graphics with full-day battery life.