The mobile Internet has been the next big thing for a decade. And while companies such as Nokia and Apple have made great strides with the N-series devices and the iPhone, these gadgets still don’t perform as well as computers. For instance, popular sites such as MySpace and YouTube can take tens of seconds to completely load on these devices, and when they do, they sometimes don’t work correctly or look right.

The problem with these gadgets, says Vijay Krishnan, a director in Intel’s ultramobile group, is their microprocessor. His company’s solution is a brand new lineup of small, low-power chips that play well with websites and are also designed to run media, including high-definition content. The chip line, called Atom, which was first announced in March, was displayed last week at Intel’s Developer Forum in Shanghai. Company executives showed off slick-looking gadgets, called mobile internet devices (MIDs), that are expected to hit the market by the middle of the year.

“The iPhone is a great example of delivering the Internet in your pocket,” says Krishnan. Apple’s phone uses a processor from ARM, the company that supplies many of the chips that run on cell phones worldwide. But, he says, there are a few areas that could be improved. For instance, an Atom chip is four to six times faster than ARM chips, which translates into faster downloads and smoother video-watching experiences. In addition, he says, the chip is compatible with many Web programming languages and applications–such as JavaScript and Flash–which makes Atom more compatible with all parts of the Internet. Using a device with an Atom chip, he says, gives access to “all of the Internet, without generating errors.”

To build the new chips, Krishnan says, Intel focused on power consumption. The dual-core chips in today’s laptops use up to 35 watts. The Atom line, which will offer roughly the same performance as a typical chip in a four-year-old laptop, uses three watts or less. Krishnan explains that one way this is achieved is by creating six separate power states for the chip. Depending on how the device is being used, the voltage the processor uses and clock speed of its components can be varied, while certain components , such as memory cache, can be turned off when not in use. “When we use all of these power states,” he says, “we’re able to keep the average power on chips to 160 to 220 milliwatts.” These low power requirements can noticeably extend battery life, he says.

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.”