Intel, AMD Set for Notebook Bout

The chipmakers are preparing for an intense battle in this fast-growing PC sector.
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Notebook computers were hot throughout 2005, boasting sales-growth rates that left desktops in the dust. So, it's fitting that the two big PC microprocessor makers will begin the new year by drawing the battle lines around the laptop.

Intel

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will officially launch its new notebook processor at the Consumer Electronics Show in Las Vegas this week. And some industry observers believe

Advanced Micro Devices

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could offer details on its own upcoming notebook processor at the event.

With several shifts in the technology landscape coming into play in 2006, each chipmaker is hoping to capitalize on key differences in its mobile processors to take control of the growing notebook market.

"It's really shaping up to be a good battle," says Sam Bhavnani, the mobile electronics and computing principal analyst at industry research firm Current Analysis.

AMD's 64-bit mobile processor architecture could give it an edge as consumers and businesses upgrade to

Microsoft's

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new Vista operating system, expected to launch in the second half of this year. Vista, which is Microsoft's most important operating system upgrade in years, will for the first time process data in 64-bit chunks.

While Vista will still run on computers featuring 32-bit processors, it's expected to be a substantially better experience on 64-bit processors. AMD's Turion processor, which already supports 64-bit processing, will allow people to fully take advantage of the new operating system's power and functionality.

In the past, says Insight 64 analyst Nathan Brookwood, microprocessors with 64-bit architecture for notebooks and desktops were really a nonissue because there weren't any operating systems and applications that took advantage of it. "But this time it might actually sway some buying decisions," Brookwood says.

Intel says it will have 64-bit notebook processors available by the time Vista ships. But its lack of 64-bit processors in the months leading up to the Vista introduction could cost Intel sales if buyers opt for future-proof AMD-based notebooks.

For its part, Intel appears to have an impressive notebook product on its hands with Yonah, the code name of its new mobile processor, which, for the first time, will bring the advantages of dual-core processors to notebook users.

Even if AMD is able to catch up and introduce its own dual-core Turion early this year, as some analysts believe it will, the company will face a high hurdle matching Intel when it comes to power consumption benefits. That's because Yonah is built using 65-nanometer circuitry, while AMD still relies on less-advanced 90-nanometer technology. And Intel has invested significant R&D resources to devise various tricks to make its dual-core chip conserve power.

At a conference in December, Intel mobility group head Sean Maloney crowed that Yonah will give consumers twice the performance of previous mobile processors without consuming any more power. There are indications that this might not be mere hyperbole. Early reviews of the Yonah on anandtech.com, a must-read site for hardware buffs, praise the chip's performance and power consumption, concluding that the Yonah is able to "truly bridge the gap between mobile and desktop performance."

The billion-dollar question is which of these two attributes -- early Vista upgradeability or battery life -- will prove more important to consumers and business buyers as they shop for notebooks in the first half of 2006.

The answer may turn on which company's message prevails.

Intel's

marketing prowess is legendary. And one sign of how seriously the company is taking the forthcoming notebook competition are the company's plans to retire its venerable Pentium brand for mobile processors next year, in favor of new "Core Solo" and "Core Duo" brands, the latter drawing attention to the company's dual-core processors.

Of course, AMD already has a head start in trumpeting the importance of 64-bit computing, having introduced the AMD64 architecture in 2003. And the company's message could get a helping hand from Microsoft next year, when the software giant launches its own advertising campaign introducing the world to its 64-bit Vista OS.

At stake for both companies is the booming market for notebooks.

"Every market is important to both those companies -- servers, desktops and notebooks," says Mike Binger, a fund manager at Thrivent Financial, who owns both Intel and AMD. "But out of the three of those, notebooks have the highest growth rate."

In the third quarter, sales in

Dell's

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mobility division were up 38% year over year, whereas desktop sales declined 2%. At

Hewlett-Packard

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, notebook revenue for the quarter was up 23% year over year, vs. 1% growth in desktops.

And mobile chips have become an important part of overall revenue mix. Intel's mobility division, which includes processors and chipsets, contributed one-third of the company's total revenue in the third quarter.

AMD has stated that it intends to take the lead in mobile processor market share in the next few years. A strong showing in 2006 would be a good start.