Intel appears on the verge of achieving CEO Paul Otellini's long-held dream of diversification, moving beyond near-total dependence on x86 PC and server processors.

I wouldn't say they're there yet -- that's why I wrote "inches" in the headline -- but Intel has made significant progress in its bid to get off its traditional-processor addiction. The effort revolves around Atom, the downsized, low-power chip which has become the de facto device for netbooks. Intel has expanded Atom into a System-on-Chip (SoC) offering -- an explanation about that later -- enabling it to play in the burgeoning embedded computing arena.

First, some history. The idea that Otellini wants to broaden Intel's horizon's is nothing new. As I wrote when he became chief executive in May, 2005:

"A future-directed focus will likely become a hallmark of the Otellini regime, as he formulates a strategy for building up some of Intel's non-processor businesses--particularly, communications--that haven't been achieved their full potential."

That strategy hit a rut in 2006, when Intel sold its ARM-based XScale processor operations to Marvell Technology Group Ltd. for $600 million. The XScale devices were communications processors, which appeared in a variety of mobile phones, including some Blackberrys. At the time, I wondered why Intel was bailing on an effort which had previously been touted as a major communications push. In retrospect, I can see that the operation must have been a minor revenue contributor (Assume that the $600-million sales price was a multiple of revenue, and note that Intel's 2006 revenue was $35.4 billion.)

More importantly, Intel must've figured it would have required significant investment to maintain XScale's position in the rapidly evolving communications sector-- an arena where the product life cycle is faster than in PC processors, and, more to the point, where the timing of revisions is not dictated by Intel.

So Intel bailed. But now it's back, in a non-PC arena where it's nicely positioned to win. That area is embedded.

What's Embedded Computing?

Back in the day, the term "embedded computing" conjured up industrial, board-level computers usually controlling a manufacturing process in a factory. Adding to the esoteric patina, the boards were programmed by developers expert in C++, or, better yet, real-time assembly language.

Embedded computers are so-called because they don't look like general-purpose desktop computers -- they're typically mounted inside a box splattered with the logo of a manufacturer whose name is unfamiliar to the PC faithful -- hence the term "embedded."