Intel’s Valley View Atom Should Be More Than Just Netbooks
Recently, The Verge published an article talking about Intel’s (NASDAQ:INTC) leaked core logic roadmap, especially about its 22nm Atom processor code named Valley View. [1] This is scheduled to release in 2013 and packs up to 4 cores and 4x the graphics performance of the previous Atom processors. [1] In response, a CNET article expresses possibility of revival of notebooks with this improved chip performance. We believe that although it may help, netbooks will continue to serve a particular niche and therefore the revenue growth opportunity for Intel is virtually negligible when seen in context of its size. Instead, Intel will focus on using its improved Atom chips to penetrate tablet and smartphone market. The tablet market is currently dominated by Apple (NASDQ:AAPL) while Qualcomm (NASDAQ:QCOM) reigns supreme in smartphones.
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The primary selling point of netbooks was mobility. With arrival of tablets, the notebook sales have suffered a massive decline as tablets not only offer the mobility but also a fluid and user friendly interface. Netbook users have complained about its performance and graphics ability, and the new chip should help with that. However, we believe that even few years down the line, netbook sales will be a small fraction of tablet sales.
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The opportunity for Intel lies with tablets and smartphones. We estimate that in 2011, Netbook sales constituted about 6% of total Atom-eligible device sales. Here Atom-eligible devices imply the mobile devices including tablets, netbooks, smartphones, smart TVs and other electronic systems that Intel’s Atom can target. Even if we assume that the netbook sales will double in next 4-5 years, they will still constitute just around 5% of total Atom-eligible device sales.
The point is that trajectory of growth of tablets and smartphones is quite steep making it a lucrative market segment. Therefore, trying to revive declining netbook market does not make much sense in our view.
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Notes:- Intel’s 22nm Valley View Atom SoC leaks out, may have Ivy Bridge graphics for 4x performance, The Verge, Mar 23 2012 [↩] [↩]