ARM has been dominating the tablet processor market for a while now, and has remained confident that Intel isn't a threat. Intel is starting to fight back, beginning production of their tablet-specific Oak Trail processor. The Oak Trail, otherwise known as the SM35, will be running alongside a Z670, within the Atom Z600 series.
The Oak Trail processor is part of Intel's efforts to create more efficient, lower-profile processor for smaller form factors, like tablets and smartphones. Their Atom line, while suitable for netbooks, consumed too much power and generated too much heat relative to its speed.
With Oak Trail, Intel will be targeting the lower end of the tablet market. The combined cost of their Atom Z600 and MeeGo OS would be a mere $25. The lower-consumption processor would also mean a smaller and less expensive battery. This would allow manufacturers to introduce a lower-cost segment of tablets. The Oak Trail could also be paired with Windows 7, but it would obviously be more expensive than their proprietary OS.
Intel CEO Paul Otellini remains confident that Intel will rise to the tablet challenge. He also told his employees last month that the road to success would be a marathon. Oak Trail may be the first leg of that marathon, as Intel gains recognition as a viable tablet chip maker. They have also recently unveiled their dual-core Atom processor, showing speeds of 1.6 to 1.83GHz. When they learn to bring that kind of performance into a smaller, more efficient form, ARM won't be so dismissive of their competition.