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.
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.
The only thing mainstream about getting an ultrabook price below $1,000 is that the price is a three digit dollar value. Laptops are readily available for hundreds of dollars less. While lightweight computers are nice, these weight reductions are very pricy by the ounce. It may make more sense to carry the heavy computer and save on both the computer costs and membership fees at the local gym (just go running with the computer). For those who want a lightweight $999 computing device, buy two iPads and give one away.
It's obvious that Intel is NOT ignoring the smartphone and tablet industry. They are working hard to gain more penetration. But they won't want to give up margin. As differentiation between laptops and tablets becomes smaller, Intel will be able to exhibit their performance advantage (assuming that it exists and my experience shows that it does).
Intel is again and again ignorring the most powerfull forced in the computing industry today, Smatphones and Tablets.
I am wondering if they are really open to the market needs or just too arrogant to admit they have already missed the trend
There are 2 major cost components on a laptop - CPU and LCD. Acer and Asus offer $1000 ultrabook; whilst, Sony offers $1500+ ultrabook. Sony ultrabook has equipped with a highest resolution display.
Intel has controlled over cost of CPU. I can't wait to see price of ultrabook comes down to a much affordable range w/o sacrificing quality and performance.
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