Intel announced $11.5 billion in fourth quarter revenues — up 8 percent over 4Q 2009 — topping off record yearly revenues of $43.6 billion. Intel again emphasized tablets as a key market for 2011, not only to boost Atom sales, but also to feed a server processor market that is thriving on cloud-based services for mobile devices.

During a Jan. 13 conference call with analysts and journalists announcing the chipmaker's record fourth-quarter and full-year numbers, CEO Paul Otellini (pictured) strengthened his October claim that Intel will become a much larger player in both tablets and smartphones.

Hammering away at a theme he pushed in announcing Intel's third-quarter numbers, also in October, Otellini said he expects a host of Intel-powered devices to hit the market this year.

Intel had a record fourth quarter that topped off a very strong 2010. The semiconductor giant bounced back from the global recession thanks in large part to its enterprise business, which helped buffer it against weakening consumer PC demand.

In the fourth quarter, revenue came in at $11.5 billion — up 8 percent over the same period in 2009. Net income for the quarter hit $3.4 billion, a 48 percent jump.

Yearly revenue for 2010 was $43.6 billion, marking both 24 percent increase over recession-ravaged 2009 and the first year the company has generated more than $40 billion in revenue. Net income was $11.7 billion, 167 percent over the previous year.

Still, the bulk of that came from Intel's traditional PC and server businesses. Otellini is trying to steer the company to become a larger player in rapidly expanding markets.

Though the dominant chip maker in the world, with more than 80 percent market share, Intel has yet to be much of a player in the booming tablet and smartphone spaces, a concern for industry observers in the long term. However, company executives continue to promise a strong presence in both device segments as 2011 rolls on.

Last month, Intel said at an analyst event that its Atom Z6xx processor, in both "Moorestown" and "Oak Trail" versions, will form the basis of 35 different tablet computers in 2011.

Atom's triple play: Windows 7, Android, and MeeGo

A key differentiator for Intel over rivals who use ARM or MIPS designs is that Intel's Atom platform can run Microsoft's Windows 7, as well as the Google-backed Android and MeeGo, jointly developed by Intel and Nokia. 

"By designing Atom-based tablets, [OEMs] have the opportunity to run multiple operating systems on it, which I think is unique to Intel," said Otellini.

In the Atom-based tablet market so far, Windows 7 has the lead. Although Windows 7 is more prevalent in vertical-market and high-end corporate slates than more affordable consumer tablets, new consumer oriented Windows 7-based devices such as the Yukyung Viliv X70 are heading for market.

Several MeeGo tablets running on the Atom have shipped, but they're relatively few. Examples include WePad's WePad (pictured above, right), and the musician-oriented Indamixx 2, shown at left. 

Meanwhile, the first Android-based tablets built on the Intel Atom are set to ship this quarter. These include the corporate-oriented Cisco Cius (pictured below right) and Avaya Desktop Video Device.

Otellini also reiterated that he expects smartphone designs powered by Intel technology to hit the markets this year. So far, there has been more talk than action on this front, although Aava offers an Atom-based smartphone reference design that supports both Android and MeeGo.

Intel is looking to expand into mobile devices through internal development — particularly of its embedded-oriented Atom platform. Yet, the Atom is still something of the poor stepsister at Intel. Although Atom-based revenues grew $1.6 billion year over year, up 8 percent, revenues from the PC Client Group were up 21 percent, Data Center Group revenues grew 35 percent, and other Intel architecture group revenue rose 27 percent.

Intel is also hoping to boost its mobile footprint through external acquisitions, such as its proposed $1.4 billion purchase of Infineon's wireless business. Otellini CFO Stacy Smith said the acquisition should close this quarter.

Mobile devices push server business

While Intel makes its push into the mobile space, the rise of such devices as tablets and smartphones is helping fuel the company's strong server chip business, Otellini said. In 2010, about 245 exabytes of traffic crossed the Internet, he said.

Over the next five years, one billion more people will get online and 15 billion more connected devices — from smart TVs to smartphones to tablets and PCs — will link into the web, with traffic growing to more than 1,000 exabytes.

This is all driving the need for more servers to handle the traffic, Otellini said, pointing out that the company's data center group saw quarterly revenue rising 15 percent over the third quarter, and yearly revenue jumping 35 percent over 2009.

"The world of PCs plus new emerging computing devices is increasing the demand for servers of all types," said Otellini.

Greg Richardson, an analyst with Technology Business Research, said the trend will continue to help Intel. "Mobile devices, such as tablets and smartphones, are leading to an explosion in data and volume, resulting in growing demand for cloud and virtualized infrastructures," Richardson said in a research note. "Intel capitalized on the increased demand."

Intel's enterprise business will reap benefits from the tablet space, added Richardson. The chipmaker will be able to use its commercial presence in both servers and PCs to "establish a toehold in the business tablet space," Richardson said.

Intel's server and storage businesses also will capitalize on the skyrocketing Internet traffic, particularly in such areas as virtualized and cloud-ready servers. However, Richardson warned, Intel is missing out by not being a larger player directly in the tablet space, which was revived by Apple and its iPad last year.

Since April 2010, more than 10 million consumers worldwide have bought a tablet. "The rub: to this point, these devices have been built on architectures that don't belong to Intel," Richardson said.

Availability

More information on Intel's 4Q earnings may be found in its announcement, entitled "Intel reports record year and record fourth quarter".

Jeffrey Burt is a writer for our sister publication eWEEK.

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