Another power-saving trick is to change the way the chip reads instructions. For years, Intel has designed chips that can process information quickly, but by completing operations in an out-of-order manner: when a set of instructions can't be followed immediately, the chip processes information from other instructions, filling in the gaps when it can. This approach to computing is as chaotic as a "three-ring circus," says Nathan Brookwood, founder of Insight64, an analysis firm. The net result is a waste of power.

Intel streamlined the chip's instructions to use a technology called "hyperthreading," which effectively simulates multicore functions on the single-core Atom chips. In this design, all instructions have their own processing paths, or threads, within the chip. While more than one instruction can be processed at a time, specific instructions are processed in the order in which they are issued.

Atom, which has 45 million transistors and is less than one-tenth the size of a penny, will allow designers to pump out small Internet devices in novel shapes and sizes, says Brookwood. "Intel is enabling smaller form factors," he says. "This is good." However, he notes that the company is not yet able to compete with ARM chips in terms of power and thermal dissipation, two main factors that will keep Atom out of mobile phones in the near future.

Intel's Krishnan says that in 2009 the company will release a next-generation platform called Moorestown, in which the chipset will be shrunk and power will be reduced by "an order of magnitude." But right now, he says, Intel is focused on devices that send and receive data, not voice, over the airwaves. The first generation of Atom-based devices were targeted to people under 30, he says, who spend as little as 15 percent of their time on the phone and about 85 percent on text messaging, e-mail, and Web browsing. "In our view," he says, "there is a void here that 'smart' phones don't give the user the best possible experiences."