Intel must focus on new markets to remain competitive after two years of "dramatic changes ", researchers urged today.

A new In-Stat report noted that Intel has transformed itself since the beginning of 2006 with a new chief executive and major cost cutting initiatives prompted by increased competition from AMD.

Intel has a completely new product line-up, and new product strategies to enable expansion of the x86 architecture into new market segments such as discrete graphics, consumer electronics and ultra-mobile devices.

"Despite the challenges, Intel remains in a good position to transition with the market and remain a driver in the direction of technology, if it can remain competitive in these new markets,” said In-Stat analyst Jim McGregor.

The In-Stat study suggested that the chip giant's LPIA microprocessors are key to its future microprocessors and consumer system-on-chip offerings.

The first product in the Larrabee family, which is targeting graphics, will bring together a new high-speed on-chip interconnect, LPIA processor core, graphics core and die stacking for cache memory, a first from Intel.

Although Intel has changed its memory strategy to focus on Nand, In-Stat believes that Intel is likely to exit the discrete Flash market within a few years because of difficultly making a positive return on investment.