Intel's Bay Trail, and the Revenge of the Netbook

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The netbook didn't die immediately. It survived the initial punch to the face from Apple's ( AAPL ) iPad, which offered better battery life, a more intuitive interface, and an escape from the general mediocrity of Windows ultra-portables. It did not, however, survive the knife in the back from Microsoft ( MSFT ). The introduction of Windows RT called into question the viability of Windows 8 in small form factor devices, while Microsoft's foray into hardware raised doubts about the ability of manufacturing partners to compete with the much bigger brand. Shortly before the Surface was released, Asustek (TPE:2357) and Acer (TPE:2353) abandoned the netbook , leaving it for dead.

One year and a $900 million write-down later, we know that the Surface RT was a flop. Dell ( DELL ) announced last month that it was dropping Windows RT altogether; Hewlett-Packard ( HPQ ) and Toshiba (TYO:6502) had already moved on. Now, the OEMs (original equipment manufacturers) are bringing the netbook back to life - at least in spirit. A new generation of ultraportable PCs is hitting the market this fall, equipped with Intel's ( INTC ) Bay Trail system-on-a-chip. These machines are small, they're inexpensive, and they run the full (and perhaps soon, the only) version of Windows 8.1. They're also compelling enough that PCMag has penned an early obituary for the second-generation Surface.

Unlike their predecessors, these latter-day netbooks are no slouches when it comes to battery life and form factor. Lenovo's (HKG:0992) 8-inch Miix 2 could be a stand-in for the iPad Mini, measuring in at about the same size and weight. Offering between 9 (Anandtech) and 12 hours (Laptop Mag) of wireless browsing on a full charge, the 10-inch Asus' Transformer Book T100 lasts as long as most Android tablets. And at $299 and $349, respectively - a price that includes both Windows 8.1 and the full version of Office - these two units are considerably cheaper than Microsoft's tablets. The T100 is only Bay Trail machine currently shipping, but devices from Toshiba, Dell and HP are expected to hit shelves in November, and Intel claims more than 50 design wins with its new mobile processor.

However it fares with consumers, Bay Trail should perform well in the enterprise market. IT departments stand to benefit from a move toward Windows 8 tablets, eliminating some of cross-platform woes and security holes associated with IOS and Android. Bay Trail devices present an opportunity for Dell and HP to upsell their corporate clients; for instance, Dell's Venue Pro tablets have been built to take advantage of Dell Enterprise Services. Many of these machines ship with keyboards and/or styluses, and it's notable that the Windows OEMs have embraced multipurpose devices in a way that competition generally hasn't.

The strategy might be paying off. During Intel's third quarter conference call, CEO Brian Krzanich said that he was "already seeing some signs of tablet market share win back, as these 2-in-1 devices - especially in enterprise and the business side - hit the market and people see the value of having both devices."

The chipmaker was given a gift in September, when Apple announced the 64-bit A7 processor. For years, the only mobile systems-on-a-chip with 64-bit capability were Intel's. This never mattered, due to the Atom's shortcomings on battery life, and the fact that no mobile operating system could take advantage of the wider architecture. With IOS now pushing into 64-bits, Android may soon follow, and neither Qualcomm (QCOM) nor Nvidia (NVDA) appear anywhere close to a commercially available 64-bit product. ARM and its partners were caught sleeping; Samsung (OTCMKTS:SSNLF) says it will have a competitive chip for the Galaxy S5 next year, and that's as good as it gets. Anandtech's Anand Shimp says : "I'm still vetting other SoCs, but so far I haven't come across anyone in the ARM camp that can compete with what Apple has built here. Only Intel is competitive."

Though 64-bit may be a "gimmick," as one Qualcomm exec suggested, gimmicks do occasionally catch on . If the Atom finds its way into Android hardware, we may see more devices like the obscure Surge Tab PH-101 - a tablet that dual-boots Android and Windows 8. In that sense, Bay Trail may prove to be something of a Trojan horse for Microsoft and the PC world.

Intel expects a full range of Bay Trail machines for Black Friday, and by year-end we might have some idea of whether the netbook is back for good - or just back for more.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Technology

Referenced Stocks: AAPL , DELL , HPQ , INTC , MSFT

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