Intel has another rival to contend with in the netbook CPU space, with the announcement at CES from Freescale that is would be released a chip aimed at mini computers that cost less than $200 (137).
This indicates that consumers are likely to see netbooks available at an even lower cost than curernt models, which tend to retail for around 300- 400.
"What they're (Freescale) targeting is definitely the way netbooks are going," said Phil Solis of ABI Research.
Freescale's new ARM-based chip is from its i.MX line, which is designed for various mobile devices. The company said the chip would enable netbooks with an 8.9-inch display to receive eight hours of battery life. Freescale's reference design features the Linux-based Ubuntu operating system.
The company did not give a price for the chip, which will be showcased at the annual Consumer Electronics Show in Las Vegas this week.
Netbooks have taken the PC world by storm. Research group DisplaySearch estimates notebook shipments at 14 million in 2008, up from less than one million in 2007.
Currently, Intel's Atom processor dominates the netbook market, although competition is likely to heat up. Rival chip maker Advanced Micro Devices will also unveil a chip for ultra-portables at CES.
The success of netbooks has stirred fears about segment cannibalisation and pinched margins for PC makers.
Henri Richard, Freescale's chief sales and marketing officer, said the fast growth of the netbook market made it impossible to ignore and that fears of cannibalisation are overblown. Any company that refuses to get into the space is "making a huge mistake," he said.
"It's happening, it's there, it's real. And if you're not there to take advantage of it, you're going to miss big," said Richard.
Richard said some are predicting as many as 30 million to 40 million netbook shipments in 2009. DisplaySearch expects netbooks to make up 16 per cent of the notebook market by 2011.
Richard, who left AMD in 2007 after spending seven years as head of sales and marketing, said Freescale's netbook offering is seeing "significant interest" from contract computer manufacturers in Taiwan.
"Since those guys never develop anything unless they have customers behind them, that must mean that some large market players are looking at the technology," he said.
Asus, for one, has said it plans to release a netbook for as little as $200 (137).
