The way I think Intel can get competitive is by building a system on a chip. Think a cpu, gpu, and perhaps other cores on a single chip, consuming relatively less power. Nvidia is doing that with an arm cpu.
Intel does have a pretty good performing SOC with the CE4100 based on the atom cores, they just can't get the power under control for the handheld market. I think they're still losing against arm with the new process, though it surely closes the gap. http://www.anandtech.com/show/4029/the-boxee-box-review/3
Is it better performing than the older Atoms? My 1.6Ghz atom, with hyperthreading, is slower than my 1ghz Tegra2 arm, per core, and the arm is dual core. Depending on the benchmark the arm is up to about 50% faster on single core benchmarks. And the arm is lower power...
There are a number of different generations of atom cores and ARM cores of course. I don't have raw benchmarks, but my impression was that CE4100 at 1.2 was beating the previous gen of ARM at 1. D-link/Boxee was based on the tegra 2 platform and famously had to add 6 months to their development cycle switching to the CE4100 because the tegra 2 wasn't performing well enough for them - though I don't know the specifics there of what task wasn't performing well enough.