Intel launched its low-power Atom processor at Computex earlier this week, but the device's true raison d'être is a source of confusion for many.

As the Atom begins to show up in low-cost budget laptops introduced at Computex this week, numerous press reports and blog posts continue to peg the device as Intel's ticket into the mobile phone market.

But instead of smart phones and other high-end mobile devices, a new generation of cheap and scaled-down PCs like the Asus Eee should represent the vast majority of Atom design wins this year and next, analysts say.

“Atom will enable a whole new class of [laptops] that are much less expensive than current products,”" Nathan Brookwood, principal analyst for Insight64, said. "These will be [laptops] for £125 to £150 that will not have the capabilities of today's full-priced [laptops]. They will be for people who just want something that can handle their email, a little bit of web access, and maybe a more child-proof keyboard that won't be destroyed if you spill something on it."

The confusion about Atom largely stems from how Intel's PR team has positioned the device, Jim McGregor, an analyst for In-Stat says.

"Atom is a processor core aimed at a whole plethora of cheap products," McGregor says. "But Intel has put all of its marketing and PR effort into promoting it as a processor solution for high-end mobile devices, ranging from a new generation of hand held devices up through emerging PCs. But nobody really knows when and if these markets are ever going to take off."

A low-price processor for low-price laptops

In the immediate future, OEMs will mainly look to Atom's cheap price and largely stripped down performance with a single "in-order" pipeline that dates back to the original Pentium chip for inexpensive and lightweight laptops. Intel would not disclose pricing, but the OEM price of $45 for the Intel Atom Z500 certainly makes it a good fit for portable devices. (The Z-Series processors are intended for handheld use, but are architecturally identical to the N-Series chips for laptop use.)

Examples of no-frills laptops with the Atom inside include the Asus Eee, which is expected to soon launch with the processor. There is no word on the upcoming Atom-based Asus Eee's pricing, but suffice to say a sub-£150 price point should make it competitive.

Other launches include the MSI Wind, which will retail for £319.95 with Linux or £349.95 with XP Home when it reaches retail channels in a few days.

Sharp debuted its first Atom-based laptop earlier this year, called the Willcom D4. Slated for launch in June in Japan at a retail price of ¥90,200 (£435), the laptop will have a 1.33GHz Atom processor and a 5in display, 1Gb RAM, 40Gb hard disk, Wi-Fi and Bluetooth.

More launches will follow at this week's Computex as OEMs seek to appease consumer demands for cheap and portable PCs to be used essentially for office applications and internet connectivity. According to McGregor at In-Stat, OEMs should eventually launch laptops with the Atom that will retail for less than £150.