Atom netbook chip propels Intel to top of market

Rival AMD lost ground in 2008 while Intel's low-priced Atom has become increasingly popular as the netbook market gains steam

The success of Intel's Atom microprocessor, used mainly in netbooks, helped the chip maker gain market share in every quarter of 2008 and could carry the company this year as well.

Intel's share of the microprocessor market grew every quarter last year, market researcher iSuppli said Wednesday.

[ Intel's Atom is also beginning to show up in systems that some vendors consider full-featured PCs. | Stay ahead of advances in hardware technology with InfoWorld's Ahead of the Curve blog and newsletter. ]

The chip maker ended the fourth quarter of 2008 with an 81.8 percent share of global microprocessor revenue, up from 78.4 percent the same time a year earlier.

"Intel's low-priced Atom has become increasingly popular as the netbook market has gained steam," said Matthew Wilkins, principal analyst at iSuppli, in a statement. He added that Intel's strength in microprocessors overall and its strong marketing were the main factors behind its strong revenue performance last year.

Intel's biggest rival, Advanced Micro Devices (AMD), lost market share last year.

AMD's share of microprocessor revenue shrank to 10.6 percent in the fourth quarter of 2008, down from 14.1 percent a year earlier.

Netbooks could continue to boost Intel this year.

Although the company will see more competition from other chip makers entering the netbook microprocessor market, the overall market for netbooks is expected to continue to grow at breakneck speed.

DisplaySearch predicts netbook shipments will grow 66 percent this year to over 27 million units, in part due to the global recession.

"With the economic crisis on everyone's mind, many buyers are adjusting their discretionary spending and purchasing mini-notes (netbooks) as lower-priced alternatives to notebook PCs," the market researcher said in a report on Wednesday.

Aside from the downturn, the popularity of the devices took off because they're thin, light and more affordable than laptops.

"With the lone exception of Apple, all of the top 15 PC brands have entered the [netbook] market, initially as a response to competitive threats posed by Acer and Asus, but also to satisfy demand for low-priced, entry-level PCs," said John Jacobs, director of notebook market research at DisplaySearch, in the report.

Asustek Computer (Asus) pioneered the commercial launch of netbook devices in late 2007 with its Eee PC. The company was soon followed by Hewlett-Packard and Acer, which led the netbook market last year with its Aspire One.