FTC Suit May Affect Intel's Atom Sales, Says Report

The FTC's suit against Intel - which is pursuing not monetary but business changes on Intel's part - may affect Intel's Atom netbook business, which is already threatened by competitor ARM, according to ABI analyst Kevin Burden.

The complaint filed by the Federal Trade Commission against Intel on Dec. 16 could affect Intel's Atom processor business, according to a report from ABI Research.

Specifically, the ABI report found that any action by the FTC could have a big impact on Intel's different businesses, including its Atom line and allow competitors, in this case ARM, to grow its market share, especially in the netbook space.

Intel's Atom processors are the primary processors used in netbooks - the light and inexpensive mini-notebooks that recession-crunched consumers have been turning to. Netbook sales in the third quarter of 2009 helped to encourage overall PC market growth, after three consecutive quarters of losses.
ABI analyst Keven Burden states that while Intel doesn't hold the same role in the mobile device industry that it does in the personal computer market, whatever actions the FTC takes will affect all of Intel's business units, including those relating to the Atom processor.
"ARM-based processors are the leading architecture powering mobile phones, and while Atom has had early success in the netbook segment, ARM-based processors are positioned to capture a growing, and possibly significant share of new netbook models in the coming year," Burden wrote in the report.
"Intel's position in the netbook market is already threatened by the low power consumption and connectivity capabilities of ARM processors," Burden continued. "If successful, these actions by the FTC would make it that much easier for ARM to extend its lead in mobile devices."
For example, in October, at the TechCon3 show, ARM showed of its Cortex-A5 MP processor design, which is intended for mobile devices such as smartphones and netbooks.
The powerful Nokia N900 smartphone, which Nokia calls a mobile computer, features ARM's 600MHz Cortex-A8 processor.
In a Dec. 15 report, Morgan Stanley wrote that it expects global smartphone sales to surpass global notebook and netbook sales by the end of 2010 - and to surpass the overall PC market by 2012. If this trend continues Intel could begin positioning its Atom processors as an alternative to ARM-based chips for smartphones. Earlier this year, Intel and LG announced an agreement to use an Atom chip in a new type of smartphone that should hit the market toward the end of 2010.
In the lawsuit that FTC filed this week, the agency accuses Intel, in ABI's words, of "using illegal incentives to encourage computer and device manufacturers to use Intel processors over those from competing chip maker."
In November, Intel reached a $1.25 billion settlement with CPU competitor Advanced Micro Devices, after the European Commission found it guilty of violating anti-trust regulations. However, the FTC suit is said to be different from past suits in that, instead of a momentary rebuke, the FTC wants Intel to change some of its business practices.