072009: Intel takes on developing world with dust-proof PCs

Technology

MONDAY, 20 JULY 2009 17:36

INTEL Corp., readying a new version of its Atom chip, is taking a second crack at getting customers in developing countries to buy more personal computers (PCs). The first crop of Atom-based computers, released last year, were designed to win over customers in places such as rural China and India. Instead, consumers in the US and Western Europe snapped them up to use as extra PCs, said Sean Maloney, Intel’s head of sales. The company now wants Atom to achieve its original goal: appealing to people who don’t already own computers, he said. Intel is building a new version of the chip that uses less power and helps PCs survive more severe conditions in the developing world. The company, the world’s largest chipmaker, also is counting on wireless carriers to subsidize the cost of the PCs. “As yet, they’ve not been a huge success in emerging markets,” Maloney, 53, said in an interview. Atom sells for a fraction of the price of Intel’s other processors. That allows PC makers such as Asustek Computer Inc., Dell Inc. and Hewlett-Packard Co. to offer PCs for a few hundred dollars. Broadening sales of Atom-based computers would help Intel offset a slump in the overall PC market, which accounts for more than 90 percent of its sales. Laptops run by Atom chips—known as netbooks—have mainly served as an accessory for existing PC owners, said Patrick Wang, a Los Angeles-based analyst at Wedbush Morgan Securities. “It’s become basically that fashion statement, that secondary toy,” he said. Buyers in the developing world have spurned low-end computers over concerns about durability, says Santa Clara, California-based Intel. Unlike in the US, many shoppers in those regions can only afford one computer, so it has to be rugged enough to last. Intel’s challenge is creating something that doesn’t cannibalize sales of its more expensive products. The company says that won’t happen because netbooks only have 10-inch screens and limited computing functions. That means they don’t compete with more expensive laptops, Maloney said. Google is developing a new computer operating system, based on its Chrome Web browser, that will initially be targeted at netbooks. Netbooks were the PC industry’s only source of growth last year, bringing in more than $500 million in sales for Intel. The netbook market will rise to 126 million units in 2015 from 12.5 million in 2008, Piper Jaffray & Co. estimates. In total, about 302 million PCs sold last year, according to Gartner Inc., a research firm in Stamford, Connecticut. Intel also is trying to spur sales of netbooks’ desktop counterparts: machines called nettops. So far, low-cost desktop computers haven’t met the needs of people in places like India, said Noury Al-Khaledy, the general manager of Intel’s netbook and nettop business. Current products can’t stand up to dusty working conditions, he said. “Dust is a huge problem,” Al-Khaledy said. “If you spend $299 on something that doesn’t work, and you’re not making that much, that’s a whole lot of money.” A lower-power version of Atom will help with dust. If the processor uses less power, it generates less heat, eliminating the need to put a fan in the computer. That means the PC chassis can be sealed, keeping the electronics safe from the elements. Forging deals with more wireless carriers will be key to the growth of netbooks and nettops in developing countries, Al-Khaledy said. Wireless companies are seeking ways to bolster revenue as the mobile phone market grows saturated. Carriers could subsidize some of the cost of a computer—or even make it free—in return for an internet service contract. AT&T Inc. and Verizon Wireless already offer those kinds of deals for netbooks in the US. Mobile phone companies worldwide are in talks with computer makers about contracts that could involve millions of units, said Intel’s Maloney. In developed countries, children of netbook owners may be another big market, Maloney said. The company is working with computer makers to create netbooks aimed at eight- to 14-year-olds. “The industry really just hasn’t prioritized it,” he said. “There are a series of PC makers who are now firmly targeting that younger group, and we’ll see what happens in the holiday season this year.” Bloomberg

http://www.businessmirror.com.ph/component/content/article/52-technology/13415-intel-takes-on-developing-world-with-dust-proof-pcs-.html