Is the Atom saving Intel?

Atom moves ahead, but in what direction?

The Atom was the high point in an otherwise dismal report, with revenue declining in Q4 by 19% annually to $8.2 billion; Atom helped offset that downtrend by just $300 million. But in a quarter where net income was only $234 million, that revenue may have saved Intel from breaking out the minus signs and the parentheses.

The prospects for Atom just within the next six months look very bright indeed. The Taiwanese industry daily DigiTimes -- which pays close attention to motherboard manufacturers for parts ordering news that foundries will not supply for themselves -- reports that Asus, Gigabyte, and new netbook leader Acer are all placing orders for two new, higher-order Atom processors, the N270 and N280. Netbooks with those CPUs could be available as early as Q2.

And Tom's Hardware is citing an Nvidia source as saying that Apple's newest Mac Mini, which could be unveiled later this year, will sport an Nvidia Ion platform. That buildout, which includes its lower-power GeForce 9400, is also based on Intel's Atom.

Intel's allowing platform makers such as Nvidia carry the lead on this, rather than building some funky "Origami" or "MID" marketing initiative around it, could be a contributor to Atom's success -- and CEO Paul Otellini even said so himself yesterday. "I don't think that you won't see a PC-class branding program associated with these," he told a UBS analyst. "But there will be programs to associate it in the minds of end users and certainly we're working with our customers. We think that helps to identify the value of the full internet that these products bring. But it's not the kind of 'Intel Inside' program cooperative marketing program that we run in PC space."

AMD, meanwhile, is scrambling to assemble a competitor to Atom. The Athlon Neo will be small -- or at least smaller -- but not as small and perhaps not as versatile as Atom. Neo was being bandied about by Apple enthusiasts as the potential heart of a Mac Mini platform, but Apple generally prefers to invest in less rushed technologies.

Elsewhere in yesterday's call, Otellini warned that if his company can't push past the $8 billion revenue mark for the next few quarters, it has two options: either accelerating the obsolescence of its 45 nm generation to get rid of older technology sooner, or slowing the rate at which Intel "ramps" between its 45 nm and newer 32 nm lines. The former option might be best for Atom's success, since it helps keep Stacy Smith's "cannibalization" rate low for notebook sales, where clear distinctions in functionality and capability must continue to be drawn.

In either event, however, history will very likely come to the conclusion that thinking smaller and going more conservative was the right call.