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.