SAN FRANCISCO—Paul Otellini, Intel Corp.'s president and CEO, said Tuesday (April 17) that Intel expects Ultrabooks—the Intel-backed lightweight, low-power notebook computers—would hit "mainstream" price points in the next few months.
In a conference call with analysts following Intel's first quarter financial report, Otellini said that more than 21 Ultrabook designs are currently shipping and that more than 100 more would be shipping during the second half of 2012.
Otellini said Intel launched earlier this month its largest advertising campaign in a decade to support Ultrabooks. Intel is pushing consumer adoption of the ultra-thin notebook-style computers, which use Intel processors exclusively. Intel has applied for a trademark on the term Ultrabook. Last year, Intel's venture capital arm launched a $300 million fund to bankroll startups working on technologies in line the Ultrabook concept.
The knock to date on Ultrabooks has been the retail price of the devices, which currently hovers around $1,000 (several models are priced significantly higher). Intel has said its goal is to see the price of Ultrabooks come down below $1,000.
On the analyst conference call Monday, Otellini praised OEMs for pushing Ultrabook technology and offering systems with different mixes of feature sets. He said he expected OEMs to bring to Ultrabooks "an incredible amount of differentiation" at retail price points from $699 to $1,299.
Asked what he expected to lead to declining Ultrabook prices, Otellini said mostly competition from many OEMs bringing to market different Ultrabooks with different mixes of features. "That is driving volume and it's driving people to be competitive on some of these previously niche sort of technologies," Otellini said.
As an example, Otellini cited an Ultrabook now being shipped by Asustek Computer Inc. which features a low profile, 500- gigabyte hard drive, something that Intel did not think would be possible.
Otellini also said Intel was focused on making sure that there were sufficient quantities of Ultrabooks with touchscreen interfaces to support the forthcoming launch of Microsoft's Windows 8, which will support touchscreens for the first time. Until recently, adding a touchscreen has added about $100 to the bill of materials of each system, Otellini said. But, he added, Intel has seen that cost come down "very dramatically" over the past two to three months.
"The combination of all of these things—of the OEMs and Taiwan Inc. aiming at these volume opportunities—is really what's driving prices and costs down," Otellini said.
Otellini also reiterated on the call that Intel expects that 40 percent of consumer notebooks sold will be Ultrabooks by the end of 2012. "I'm still very confident we can do that," Otellini said. "All the signs are tracking there."
In a report circulated late Tuesday, Beau Skonieczny, a computing analyst at Technology Business Research Inc. (TBR), noted that all major PC vendors were adopting the Ultrabook form factor without hesitation. But, Skonieczny said, consumers will be reluctant to pay a premium for Ultrabooks unless they are informed about their benefits.
"Marketing will play a crucial role in orienting consumers' perception of Ultrabooks," Skonieczny said. "Collectively, Intel and its partners are investing more than $1 billion in Ultrabook marketing, spanning premium commercials, social advertising elements, branding, and retail positioning."
Skonieczny said TBR believes these initiatives will help drive higher average selling prices and margins for Intel and PC manufacturers by promoting more Ultrabook sales over traditional notebooks.
Intel's first quarter results beat consensus analysts' expectations, even as sales declined compared to the first quarter of 2011 and profit declined on both a sequential and annual basis.