Executives from Acer and Compal say that unless Intel cuts pricing on some of its chips, it will be difficult for OEMs and ODMs to get new ultrabooks under $1,000.
The issue of pricing for Intel's
ultrabook concept is once again coming to the forefront, with executives from
Acer and Compal Electronics reportedly trying to push the chip maker to reduce
the cost of some of its chips.
In a Sept. 20 report by Taiwanese news site DigiTimes
, the two executives
say that without a move by Intel to cut the prices of the chips used in the
ultralight and ultrathin laptops, OEMs and original design manufacturers (ODMs)
will be unable to get below the $1,000 price target set by Intel, or they will
have to use lower-end alternatives, which could hurt performance.
According to the report, Acer Taiwan
President Scott Lin said that without help on pricing from Intel, vendors will
be less willing to push ultrabooks. Compal President Ray Chen said Intel is in
danger of missing its projection that, by the end of 2012, 40 percent of
notebooks sold will be ultrabooks. In addition, Chen said Intel risks losing
traction in the notebook space if ultrabooks sales stagnate while Apple's
MacBook Air continues to win customers.
The lowest price on a MacBook Air is
just under $1,000, while initial ultrabooks-due out this fall from the likes of
Asus, Acer, Lenovo and Toshiba-are initially priced at more than $1,000.
Intel executives first introduced the
ultrabook concept in May at the Computex show. According to the chip maker,
ultrabooks need to come in at less than 0.8 inches thick, run an Intel
processor and be priced at less than $1,000. They will offer tabletlike
features, including instant-on capabilities, long battery life and a constant
Internet connection-while also offering the benefits of traditional notebooks.
At the Intel Developer Forum (IDF)
event this month,
Intel executives made the ultrabook a key topic
, calling it the natural
next step in the PC space. Analysts said ultrabooks not only represent a way
for Intel to get into the mobile computing space dominated by devices such as
smarpthones and tablets running chips designed by ARM Holdings, but they also
will enable Intel to jump-start a slowing PC market hampered by, among other
things, the rise of tablets.
"So far ... the response from the
market [to ultrabooks] has been phenomenal," Mooly Eden, vice president
and general manager of Intel's PC Client Group, said at the show. "It's an
evolution we want to drive. A lot of innovation is needed, but I think it is
However, since Intel first announced
the concept, pricing has been raised several times as an issue, with analysts
and vendors questioning whether prices could be driven down enough to hit the
under-$1,000 mark. Intel over the past few months reportedly has been trying to help vendors
adopt the ultrabook idea
through such steps as financial incentives to OEMs, a $300 million fund for
hardware and software developers building solutions for ultrabooks, and
reference architectures to help OEMs and ODMs bring down the costs.
But OEMs and ODMs apparently are going
to continue pressing Intel to drop its chip prices. The DigiTimes report said "sources
from PC players" noted that the CPU and operating system account for the
high proportion of the ultrabook's cost, following by ultrathin components like
the panel and solid-state drives.
Intel officials have said the systems
coming out this year will be the first wave of ultrabooks and will be based on
the company's 2nd
Generation Core "Sandy Bridge" chips. Next
year, more ultrabooks will roll out running on Intel's "Ivy Bridge"
chips, followed in 2013 by systems powered by "Haswell" processors,
with each platform offering greater performance and energy efficiency.
However, analysts have said that
pricing will play a key role in determining the success of ultrabooks. Charles
King, principal analyst with Pund-IT Research, said during IDF that the
ultrabook strategy makes a lot of sense, particularly given the "significant
shift in user behavior toward mobile computing." Intel can't ignore the
trend, but also needs to be aware of price.
"Pricing pressures will continue
to be an issue, not just for Intel but also for their vendor partners,"
King said. "One effect of the iPad has been to demonstrate to consumers
that $500 can buy them something pretty cool-a point reflected in the inability
of competitors to crack Apple's market dominance. Beating Apple will require
vendors to deliver something notably better or cheaper than the iPad. [However,]
if ultrabooks are exceptionally better, they could inspire consumers to dig
deeper in their pockets."