The new moniker "Atom" sets in marketing stone the Intel brand for small devices. I'll skip the banalities about Atom silicon being crucial for Intel's future and just pose a question: Can Intel spur innovation in ultrasmall devices the way it has in the PC and server industry?

I won't hazard any rash predictions but will make a few observations about the current landscape.

First, a little recent history. The ultramobile PC (UMPC) based on Intel's first-generation processor (the A110) for small devices has not exactly been the market sensation that the iPhone has. The Samsung Q1 and the Asus R2H are two examples of products that never really took off.

This underscores the pitfalls and potential for Intel. The pitfalls: consumers will forever unfavorably compare the UMPC or Mobile Internet Device (MID) to the more feature-rich notebook PC or, conversely, to the smaller, cheaper cell phone. The potential: a new category of computers spearheaded by a device with an iPhone-like following.

Enter the Atom-branded low-cost platform for ultraportable devices that Intel calls NetBooks. Asus's popular Intel-based Eee PC is already demonstrating the potential here. So much so that a Sony vice president recently cited the Eee PC as a threat. (He depicted it as causing "a race to the bottom" because of its low price.) The XO laptop offered by the One Laptop Per Child organization is another example. (It uses an AMD Geode processor.) Both are priced around $300 and both are Internet-centric devices that offer the same wireless capabilities of more expensive laptops.

For smaller MID-like devices, such as the iPhone and Nokia N810, success is less certain. Many of the scores of pocket-sized gadgets on the market use processors based on the tried-and-true ARM design. Intel won't displace ARM anytime soon. But these devices are proprietary, which may leave Intel an opening. Because Intel's Atom processor is compatible with the Core 2 Duo instruction set, developers of small devices have a common platform to target.

"This is our smallest processor built with the world's smallest transistors," Intel Executive Vice President and Chief Sales and Marketing Officer Sean Maloney said in a statement. "This is...a fundamental new shift in design. We believe it will unleash new innovation across the industry."

This is probably true. But Intel has a long way to go in a crowded market that bears little if any resemblance to the PC industry, where the chipmaker competes relatively comfortably with only one other company (AMD). There's also a long wait for Intel's Moorestown, the next generation of small chips for small devices due in 2009 or 2010. The great expectations for Moorestown almost overshadow the current Atom technology. Moorestown will not only be more powerful but more highly integrated: a system-on-chip (SOC) design combining the CPU, graphics, and memory controller onto a single chip.

Note: Intel will use the Atom brand in two segments. One segment will be pocket-sized gadgets, dubbed MIDs. The Atom chip targeted at this market was previously code-named "Silverthorne." The second segment will be ultra-low-cost notebooks and desktops. The Atom chip addressing this segment was previously known as "Diamondville." The "Centrino Atom" processor technology, formerly codenamed "Menlow," includes the Intel Atom processor and a low-power companion chip with integrated graphics. Atom processors are expected to ship this spring.

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Well, thats the trend in the tech-industry nowadays, the smaller the better.