While analysts are expected a drop in PC shipments this year, Intel says the computer market could end the year "slightly up" from 2008.

In the his keynote Tuesday at the Intel Developer Forum in San Francisco, Paul Otellini, president and chief executive, said he sees the PC market on the mend after being hit hard early in the year by the economic recession.

"My own bet is we are likely to see [shipments of] units in the PC market this year flat or slightly up from 2008," Otellini said.

Driving shipments is the popularity of inexpensive netbooks, mini-laptops that primarily run Intel's Atom processor and Windows XP. The slimmed down notebooks, which are useful for basic computing tasks, such as checking e-mail and Web browsing, sell for as little as $300.

Otellini acknowledged that without netbooks, 2009 would have been a "down year." Nevertheless, PCs, particularly laptops, have become a must-have for consumers for work and entertainment. "This is no longer a discretionary purchase," Otellini asserted.

Otellini's forecast is higher than what some major analyst firms have predicted. IDC, for example, is predicting shipments will fall 4.5% from last year.

In July, however, Gartner and IDC reported higher-than-expected PC shipments in the second quarter. IDC believes the market will return to steady growth by the end of year, while Gartner remains more cautious.

While Intel is preparing to enter the handheld and consumer electronics markets with its Atom processor, the bulk of the chipmaker's revenue comes from PCs and servers. In releasing second quarter earnings in July, Otellini said the company saw "improving conditions" in the PC market. In April, the CEO had said the market appeared to have "bottomed out."

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