Intel Eyes Tablet Market

July 14, 2010 2:41 PM EDT

Intel, a mainstay of the PC, laptop and netbook markets, is looking to enter the tablet market as well.

Yesterday, Intel announced its best earnings quarter ever based on the strength of enterprise customers loading up on PC spending. But Chief Executive Officer Paul Otellini said the company is looking at the tablet market also, especially in the wake of explosive iPad sales.

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"In terms of Intel participating in the tablet market we remain very optimistic about this. We feel pretty good about our opportunity to participate in the growth as it happens," Otellini said, during a conference call Tuesday.

According to Patrick Wang, analyst at Wedbush Morgan Securities, Intel has a chip in mind for the tablet market. "They have the Oak Trail chip that they've already started to sample and will begin to ship early next year. You will see a lot of product launches based on this chip. It's a system-on-a-chip and it's compatible with x56. This means you will be able to run it on all types of operating system," he said.

The biggest question with the Oak Trail chip will be power consumption. "They will need to get 8-10 more hours on each charge," Wang said.

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Otellini doesn't see tablets cannibalizing the laptop or netbook markets. "I think this is an additive category of computing, much like netbooks were an additive category. I don't see tablets cannibalizing the PC market," he said.

Brendan Furlong, analyst at Miller Tabak, says even if tablets do cut into the notebook and netbook market, Intel will be in a good position to compete. "Outside of Apple, anyone that's building a tablet like device will need to use a processor. If the tablet market takes off, even if it cannibalizes the netbook market, it's not a negative for Intel, it's a positive. Where is HP and Dell going to go? They will have to get a processor," he said.

Furlong and Wang agree Intel could run into some trouble if the iPad continues to dominate the tablet market, much like the iPhone has with smartphones. "The potential negative is that if the iPad cannibalizes notebooks/netbooks alone, and no one gets a decent slate out, that is trouble for Intel," Furlong said, though he added he did not see that happening. "I find that highly unlikely. I think HP, Dell, Acer will all come out with competitive tablet computers."

This article is copyrighted by International Business Times, the business news leader