Intel Confirms Atom Will Cost More for Netbook Makers Who Embrace ION

During a conference call today to discuss Intel’s whopping $1.45 billion fine from the European Commission over its alleged anti-competitive practices to exclude AMD, CEO Paul Otellini confirmed what I have suspected for months, something  that could prevent Nvidia’s promising ION technology from taking off.

Until now we had heard only rumors that Intel was charging more for the Atom processor by itself than it does for the Atom CPU and its corresponding chipset. In fact, many netbook vendors have told us off the record that this higher cost has been the primary reason for them being skittish about embracing Nvidia’s ION platform. ION pairs Atom with Nvidia’s 9400M graphics, which is supposed to provide a major performance boost for netbooks without taking much of a toll on battery life.

In answer to my question as to whether Intel is charging more for the Atom CPU versus Atom plus the chipset, Otellini said “We have historically offered better pricing to people who buy more product.” That could be bad news for Nvidia.

Off the record, several OEMs have told us that, while it’s possible to purchase the Atom CPU + chipset package and then swap in an ION chipset, the process is time and cost prohibitive.

During an earlier interview with Nvidia, their CEO told us that ION would add only about $50 to the cost of a netbook. That still may be true on paper, but if OEMs are forced to pay considerably more for Atom CPUs by their lonsesome,  it will force netbook makers to think twice about ION. Is this practice anti-competitive? Intel doesn’t think so. But I bet you Nvidia would beg to differ.