TechPulse 360

Intel’s 8-month-old Atom computer processor – a product capable of reorienting the chip giant’s business model – continues to sell above expectations, according to people inside and outside the company.

Atom was introduced in March with the hope it would power a new category of portable Internet devices – machines conveniently carried around yet always connected to the network. And while it was billed as the company’s smallest processor, with a low energy diet, its shadow was potentially much larger.

The chip is a low cost product with a profit margin well under those of Intel’s more traditional computer chips.

According to several outsiders, Atom demand is strong. “There’s definitely a lot of interest in it,” said Jim McGregor, research director at In-Stat. The interest appears to be coming not just from potential manufacturers of portable Internet devices, but from companies that intend to use it embedded in industrial machinery, defense products and aerospace equipment, he said.

The company should see some “design wins” for prospective products outside the consumer space in 2009 and 2010, he said.

Intel spokesman Bill Calder acknowledged that sales continue to be better than anticipated. The company said this spring that demand was strong.

“The momentum seems to be very good,” Calder said. “We’re please with the demand we are seeing.”

Several OEMs have already released Atom-powered devices, including Dell and Acer.