AMD's decision to skip the netbook market up to this point has been a curious one, considering how well the low power mobile PCs are selling. Now that AMD has officially launched its Athlon Neo chip, Intel might finally have some competition to contend with, right? Not so fast.

According to Gizmodo, AMD's answer to Intel's Atom doesn't answer very much. Instead, the site says the Athlon Neo costs more, consumes more power, and despite being faster than the Atom, the Neo surprisingly isn't intended for netbooks. Huh?

"We believe there is a significant market opportunity that lies between the less-capable mininotebook and higher-priced ultraportable notebook segments,” said Bob O’Donnell, program vice president, Clients and Displays, IDC. “Integrating the right kind of technologies will enable companies to pioneer a new category of ultrathin notebook PCs, offering consumers the value they seek in a challenging global economy."

Instead of targeting the wildly popular netbook market, AMD plans to focus on ultrathin notebooks starting with HP's Pavilion dv2 Entertainment Notebook. Previously codenamed Yukon, the Athlon Neo chip gets paired with either the ATI Radeon X1250 integrated graphics, or the optional ATI Mobility Radeon HD 3410 discrete graphics solution, making it far better suited for media-oriented applications than most netbooks, so perhaps AMD is on to something here.

Will AMD's strategy of targeting a niche market between netbooks and ultraportables pay off? Hit the jump and tell us what you think.