AMD has to face off with both ARM and Intel as it tries to get in the tablet market, said Dean McCarron, principal analyst at Mercury Research. Microsoft is unveiling Windows 8 for x86 chips, which provides an avenue for AMD to compete, McCarron said. Microsoft is providing Windows RT for ARM processors.

The tablet market has evolved around ARM, and the x86 chips from companies like Intel and AMD have been much slower on adoption. The iPad and other Android tablets run on ARM processors, and Microsoft has already announced the $499 Surface RT tablet, which is based on a quad-core Tegra 3 chip from Nvidia.

But even in the x86 market, AMD is trailing Intel. Top PC makers like Lenovo, Dell, Hewlett-Packard, Samsung, Acer and Asus have announced Windows 8 tablets with Intel's tablet-specific Atom chip code-named Clover Trail. Intel has said it is tracking more than 20 design wins, so more tablets with Clover Trail chips are expected to be released in the near future.

The feature set AMD is offering on Hondo -- which is a repurposed netbook chip -- is adequate for tablets, but questions remain on how competitive the company can be in the tablet market, McCarron . Even a small design win can be adequate for AMD, but it is not comparable to the progress ARM has made via products such as the iPad, McCarron said.