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New notebook market emerges

A new class of "mini-notebooks" is emerging, impinging on the markets for both Windows CE handheld PCs and larger ultralight notebooks.

Intel (INTC) may have chanced upon a market opportunity just as there emerges a wide range of handheld computers using almost every chip under the sun except those from Intel.

Earlier this week, the chipmaking giant quietly released a new processor for ultrasmall, handheld-class notebooks that uses less power and generates less heat than the mobile Pentium commonly found in notebook PCs. The 120-MHz mobile Pentium processor with MMX technology is targeted specifically at the "mini-notebook PC" market, according to Intel.

Mini-notebooks are already on the market, but as vendors increasingly roll out products on the back of newfound processor support from Intel, this category of computer could take on a life of its own and compete with both standard notebooks and handheld devices.

To date, Intel has not sought to compete in this market, but the extra-low-power 120-MHz MMX processor is expected to appear in mini-notebooks announced in the next few weeks, according to sources.

Some vendors are already lining up for the chip. NEC will release the MobioNX in Japan in November, with the product falling in the $2,000 price range, according to NEC officials. The company did not indicate if it would release this model in the U.S. Fujitsu is already selling a a mini-notebook in Japan.

In the U.S., mini-notebooks such as Toshiba's Libretto and the Mitsubishi Amity are already on the market. Hitachi is also preparing to announce a new mini-notebook in November.

IBM has yet to bring its 535 ThinkPad to the U.S. This Japanese product weighs about three pounds and comes with 10.4-inch LCD screen.

Mini-notebooks, usually well under three pounds, fall into the diminutive handheld computer category. The mini-notebook market appears to have come out of left field and is principally driven by notebook makers' innovations--not Microsoft or Intel, which typically engineer new markets.

Interestingly, the new chip could bring Intel into a market where it has been virtually absent. Competing handheld PCs which use the Windows CE operating system run on processors such as Hitachi's SH-3 processor, MIPS processors from Silicon Graphics, and the ARM processor from Advanced RISC Machines--but none currently use Intel processors.

But analysts say Intel has not been anxious to get into this market. "Some [OEM] customer asked them to do this. They're really more interested in pushing the performance envelope," said Michael Slater, editorial director of the Microprocessor Report, referring to the fact that this new chip forces Intel to come out with a low-performance product.

Slater also said that the market for ultrasmall notebooks, previously referred to as sub-notebooks, has never done very well. "The question is whether or not these machines get stuck in no man's land," he said, referring to a product that straddles existing markets but doesn't offer features compelling enough to create a new, viable market segment.

"Clearly, categories that compromise keyboard and screen size have not done well," he adds.

In the mini-notebook market, the Toshiba Libretto currently uses a 75-MHz Pentium, while the Mitsubishi product offers a 133-MHz processor. Neither of these products, however, use a specially designed Intel processor, nor do they offer MMX technology.

These tiny machines offer some of the advantages of a six-pound notebook: They run a full-fledged version of Windows 95--allowing users to run all their usual software--and come with relatively large hard drives. (The Toshiba Libretto, for example, has a 810MB drive.) Typically, they also boast high-quality active-matrix LCD screens.

This contrasts with Windows CE handheld computers, which run a stripped-down version of Windows, have no hard drive, and are really only meant as an ancillary device to a desktop PC. While they are cramped, mini-notebook keyboards, like the one on the Libretto, are also more useable than Windows CE computer keyboards.

CE devices and other handheld devices, however, are more mobile than even the smallest mini-notebooks, pointed out Gerry Purdy, chief executive officer of Mobile Insights, a Mountain View, California-based consulting group. Windows 95 saps battery power far quicker than the CE or the other mobile OSes, and battery life does remain one of the major considerations for mobile users.

Further, Windows 95 machines require more system memory as well as a hard drive, meaning that the device, at least for the foreseeable future, will necessarily be more cumbersome. "If you look at a palmtop today, there is no way could or would put Windows 95 on it."

Mini-notebooks are also pricey, typically just under $2,000. Windows CE devices range between $300 and $600.

Intel is an investor in CNET: The Computer Network.