Intel: Netbook shipments about to ramp

Intel is putting a lot of faith in the so-called netbook market and reckons that mobile Internet devices are about to take off too.What was telling about Intel's earnings conference call was how confident the company was about the netbook market--a tweener category between laptops and desktops.

Intel is putting a lot of faith in the so-called netbook market and reckons that mobile Internet devices are about to take off too.

What was telling about Intel's earnings conference call was how confident the company was about the netbook market--a tweener category between laptops and desktops. Netbooks, which will run $250 to $200 or so, are small laptops that are designed for wireless communication and access to the Internet. Think Intel Classmate PC and the eeePC from Asustek. The cousin to the netbook is the mobile Internet device, which features touchscreen interfaces and new form factors. In many respects, the netbook and mobile Internet device categories are very similar.

Not surprisingly, these netbooks and mobile Internet devices, which were touted at the Intel Developer Forum, will run on Intel chips. I have my doubts about how these newfangled categories will do (gallery right), but it is telling how often Intel CEO Paul Otellini kept coming back to the netbook theme.

As John Morris noted, Intel's quarter was really about strength in notebooks. Demand for laptops hasn't waned. Simply put, the notebook is the next desktop and the swap is happening quicker than you'd think.

Otellini noted on Intel's conference call:

We have previously discussed the PC market's transition to mobility and our results in Q1 show continued acceleration of this trend. Our unit shipments were up sharply versus last year and with the introduction of the low cost Netbook category, we believe that the shipment crossover of desktop PCs to mobile PCs will now happen this year and not next year, as we originally anticipated.

That's not news, but Otellini's penchant for mobile devices--at IDF 35 new designs for mobile Internet devices were rolled out--went beyond mere cheerleading. Intel thinks it can sell a lot of chips with these devices. For that to happen these mobile Internet devices and netbooks need to sell.

Also see: 2nd-generation Intel Classmates reviewed

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CFO Stacy Smith said that the ramp of netbooks will contribute to Intel's financial results beginning in the second quarter. Otellini acknowledged that it's unclear what the adoption rate will be, but he clearly thinks that the emerging markets will be critical. Here's what Otellini said:

I think the bulk of the early sales of the Netbooks has been in -- either in mature markets or tier one cities of places like China, and most people that are buying them are buying them as a fashion accessory, as a second or third notebook in the household, or women because of the form factor, both the keyboard is more amenable to their hand size or fits in a purse and those kinds of things. But I think we are in the early stage of it still. I mean, it's like the early days of the iPod and as you have different versions come out and different price points come out, I would expect us to move in particularly well in emerging markets.

He continued:

I really think the unknown dynamic is what happens when these $200 to $300 netbooks are unleashed in India and China and Indonesia and we don't -- there is no model for that at this point in time because you are dealing with something that's never existed before. So we are optimistic but we just don't know at this point.

If these new devices can do half as well as the iPod did Intel will move more than enough chips.