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Friday, 15 July 2011 13:31

Vendors not sold on Ultrabook concept

Written by Nick Farell
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Too pricey to turn a profit and revive sales

It appears Intel’s Ultrabook form factor could be a stillborn. The ultrabook concept was peddled back at Computex, and Intel hoped the thin and light form factor would turn things around in the stagnant notebook market.

 

However, with price tags of up to $1,000 and high production costs, it did not take long for sceptical vendors to start voicing their concern. Despite the high price, vendors would also incur higher production costs thanks to the use of ultrathin panels, polymer batteries and SSDs. Basically production costs are 50 to 100 percent higher compared to regular notebooks, hence vendors would have to operate with lower margins.

In response Intel decided to shower vendors with generous incentives, but this did not alleviate their concerns. HP and Asus are expected to launch their first ultrabooks by September, but at this point it seems unlikely ultrabooks will be a game-changer in the notebook market.

Analyst Calvin Huang does not expect any growth in global shipments in 2011 and he doubts ultrabooks can revive the market in 2012. He also noted Windows 8 will come too late to boost demand in 2012.

"We believe the Ultrabook is killing notebook OEMs' premium lines and may dilute their profit margins with high component costs," Huang said.

Huang warns that the ultrabook concept is not entirely new and that vendors will have a tough time competing with Apple’s Macbook Air.

"After all, most notebook OEMs do not have Apple's scale to reduce component costs for the Ultrabook,” he said.

Furthermore, in order to qualify for Intel’s subsidies vendors must follow Intel’s design guidelines to the letter, greatly reducing their choice in components and design features. More here.

Last modified on Friday, 15 July 2011 13:41
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