Market research firm IHS believes the chip giant could reinvigorate the PC industry--if it's willing to sacrifice its own margins.
With the traditional PC apparently heading the way of the abacus, market research firm IHS is proposing a radical course of action: that Intel Corp. cut the price of chips supplied to PC makers to enable ultrathin touch-screen PCs that appeal to consumers and cost just $200.
It's just an idea at this point, but IHS believes it could become reality. If so, such lower priced notebooks may stem the tide of the last year and stop tablets from cutting into PC sales.
According to IHS, Zane Ball, vice president and general manager of global ecosystem development, is set to present his company's plan to empower the PC industry to produce low-cost notebooks with touchscreens Monday (May 20) at an IHS event in Vancouver, Canada.
To date, Intel's initiative to re-invigorate the PC industry by pushing Ultrabooks and other models of ultrathin notebooks has not achieved wide scale success. Meanwhile, PC sales continue to contract as consumers increasingly opt for tablets, which generally cost less and provide more mobility and convenience.
According to Craig Stice, senior principal analyst for compute platforms at IHS, a $200 ultrathin notebook seems a little far fetched at first glance, considering that many Ultrabooks and ultrathins currently on the market go for $1,000 or more. But Stice believes Intel has a shot at making it work.
"The small laptops known as netbooks saw their prices reach down into the $200 range at the height of their popularity a few years ago, and a cost analysis of netbooks shows how such a low level of pricing can be used to support a no-frills type of ultrathin PC," Stice said, in a statement.
The cost estimate for a standard netbook, based on the IHS Compute Systems Cost Analyzer that calculates the major components of a netbook on a third-quarter 2013 timeline, comes out to $207.82. .
"Hitting this kind of price point is not impossible for the PC industry, already a cutthroat market accustomed to razor-thin margins," Stice said.
Stice noted that Paul Otellini, Intel's out-going CEO, predicted during a recent earnings call that touch-enabled, ultrathin Intel-based notebooks using non-core processors could be available by the end of this year.
Not everyone agrees with IHS's vision. "Yes, a $200 PC would spur demand, but it misses the point," said Jim McGregor, founder and principal analyst at Tirias Research. "Computing is changing. People are moving away from the traditional PC platforms just as they did from the desktop to the notebook."
In a recent blog posting on EE Times, McGregor maintained that wearable computers would be a driving force for computing in the future. He believes the definition for what is widely considered computing is changing.
"While the PC is still a viable market, it is not the technology driver or a high-growth market, nor will it ever be again," McGregor said. " I would argue that Intel needs to push for a $200 PC just to maintain sales of the existing form factors."
A key question is whether Intel is willing to sacrifice its margins to make chips available to PC OEMs at a low enough cost that this could become a reality. But with the PC business—Intel's lifeblood—on life support, the No. 1 chip vendor may have to make some bold choices.
An interesting concept, but the Ultrabook to date has been more a premium product Intel is trying to cost reduce to mainstream markets.
The performance and peripheral set at the IHS BoM would not make for a very interesting user experience.
Even Google's Chromebook Pixel which removes the Windows OS tax and a hard drive still sells for $1,200-$1,500 for a premium Web experience.
Is that chart listing the manufacturer's cost for those components or what would be a retail (to the customer) price for the components? If it's manufacturer's cost, that's a $600 - $800 retail device.
That said, I would think that a $200 retail laptop of sorts is quite possible. Looking at retail purchasable products, a PC can be put together at around the price point you're looking at. The compromises would need to be in the mechanics and the software.
With something like the Raspberry Pi at the heart, the OS would need to be thinned out a bit in order to get an acceptable level of performance for household tasks. In my opinion, the biggest problem with the first generation of net-books was the OS overhead. Take care of that and it's viable. Don't and it's not.
$200 seems quite an aggressive target for an ultrathin mobile PC. Instead, perhaps they should focus first on making those new generation notebooks roughly the same price as a tablet. I also agree with Rick that IHS's BoM seems very basic, and that most users will demand a more powerful and more full-featured machine.
It's a good thing Android doesn't rely on Intel and x86 chips at all, so it won't matter if Intel can do it or not. ARM chip makers will do it, and have already done it (hello Samsung Chromebook! - granted it's not Android, but same thing)
As Rick & Frank pointed out, a 200$ ultrabook with windows will be severely under performing device. whats the point of having such a device?
On top of that, why would Intel want to build such a device? to kill their 200$ CPU business with 20$ CPU business?
Wow, that would be an agressive price point alright. Perhaps what everyone is struggling with here is that Intel needs higher prices just to stay afloat. So perhaps, by inference, Intel should maybe be looking at changing its busness model entirely? To one of developing IP?
As to the repeated comment that PC sales "will never recover," please refer to the Windows 8.1 article in today's EE Times. It's only a matter of semantics. People need to broaden their perspective on what they call a PC, that's all. In the article on Win 8.1, check out how college students use Win8 "tablets," connected to a docking station, to do all their real work.
That system with a $200 BOM is not a $600 notebook, it's a $300 notebook. Hardware profit margins are pretty thin, both for manufacturers and for sellers, unless you happen to be Apple.
But it's also not Good Enough, at least not if it's going to run Windows. You really want at least an 11" display at 1366x768 resolution in the notebook form factor (where the screen is farther away than a tablet screen) and 4GB RAM. And you didn't include the cost of a Windows license. At that point you have an ASUS VivoBook X202e (except that it has a Core i3 instead of an Atom), which is currently selling for $400 and is a nice value at that price. Swapping in an Atom would give you less speed and more battery life and probably not change the price a lot; some users might prefer that tradeoff.
I don't think we can get to the $200 price point right now and build a compelling Windows notebook computer; we'd just be back to Netbook Redux. Perhaps in another year or two, as costs continue to come down. Meanwhile I think there are some sales to be made by $400 notebooks.
Alternative platforms like Chromebooks can reach lower price points because their hardware needs are smaller; 2GB and a small SSD are enough. It also helps that Google is willing to sell them at cost.