Eat Your Children - Is Intel's Atom Strategy Opening The Door To Competitors?
Intel's [INTC] Atom microprocessor is a fine chip and it's designed specifically to power Netbooks - a new category of computing device.
Netbooks aren't supposed to be replacements for Notebooks. They are designed to offer a good web browsing experience and nothing more.
Currently, Intel assumes that accessing the Internet doesn't require a powerful microprocessor. That might be true today, but it's certainly not going to be true tomorrow.
Intel has said that the Atom roadmap has no place for Atom-based devices that would provide a rich-PC-like experience. And this makes sense because otherwise this would cannibalize sales of its more expensive mobile microprocessors.
But this strategy could run into problems. The reason is that the Internet is rapidly becoming the PC experience. On many notebooks and desktops, the web browser is always on - it often takes up more screen real-estate than the operating system or any other desktop application.
And increasingly, applications are being pushed off the desktop and into the cloud. Increasingly, the web browser is demanding more and more from the microprocessor.
Already, Atom-powered Netbooks do a poor job with streaming video -- at least from my experience with several models. Video is nearly unwatchable with constant stuttering.
But isn't streaming video part and parcel of the web experience? So shouldn't netbooks be good at all aspects of web browsing?
What concerns me about Intel's Atom strategy is that it must deliberately handicap the performance of Atom chips because it has a more profitable revenue stream to protect. However, Intel's competitors have no limits on improving the power of their chips.
Graphics chips already provide powerful computing platforms, especially useful in rendering graphic user interfaces and video -- core functions for a great Internet experience. But they don't provide the X86 compatibility that is often required for today's operating systems, browsers, and other applications.
With the advent of operating systems such as Google OS, and also Linux, and a whole new class of web-based applications, this reliance on X86 compatibility will become less important in the near future. This will provide some opportunities for Atom competitors.
But since Atom's roadmap is designed not to cannibalize Intel's other microprocessors, has Intel painted itself into a corner?
Intel co-founder and chairman Andrew Grove tried to instill within the company a culture of "eat your children." The idea was to cannibalize your own products so that your competitors couldn't attack your business -- there would be nothing left to "eat."
In this case, it looks as if there might be plenty to eat if Intel isn't careful. The current microprocessor roadmap is covered in ketchup.