Intel denies 50% Ultrabook CPU cut to aid matching MacBook Air prices
Notebook player insiders said that partners for Intel's new thin-and-light initiative had demanded a 50 percent price cut, but Intel has agreed to provide just a 20 percent discount to "first-tier notebook players," DigiTimes reported on Tuesday.
The sources went on on to say that the high CPU price, attributed to Intel's insistence on maintaining its "leading position in the supply chain," will impede progress and stymie efforts to put forth the Ultrabook standard as a counter to competing devices, such as Apple's MacBook Air.
According to the report, Intel's Oak Trail chips for tablets cost $95 and are "far less attractive" than Nvidia's Tegra 2 processors, even after a 70-80 percent discount. "Although players such as Asustek Computer and Acer have launched models with the platform for the enterprise market, their machines' high price still significantly limit their sales," the sources were noted as saying.
As for Ultrabook CPUs, Intel has agreed to provide marketing subsidies in addition to its modest discount. The 20 percent price cuts reduce the Core i7-2677 to $317, Core i&-2637 to $289 and Core i5-2557 to $250. Intel is said to be concerned that further reductions in price would affect its 60 percent gross margins.
Intel has taken a more involved role in helping manufacturers reach the sub-$1000 goal for new entry-level Ultrabooks. Earlier this month, the company produced a set of reference bills of materials ranging from $475 to $710 to show that lower price points are possible. The chipmaker has even backed the Ultrabook standard with a $300 million fund from its investment arm that will invest in Ultrabook-related technologies.
But, Ultrabook makers have reportedly struggled to compete with Apple's stream-lined supply chain. For instance, competitors have had to search for alternatives to the magnesium-aluminum chassis that Apple uses in its MacBook Air notebooks. According to one report last month, some companies have found that actual production costs for Ultrabook laptops are roughly the same as MacBook Air retail prices.
Asustek Computer is hoping to release two Ultrabook models, an 11.6-inch UX21 and 13.3-inch UX31, later this year. While the UX21 will reportedly retail for $1000, the UX31 will cost $1600, a $300 premium on Apple's $1,299 13.3-inch MacBook Air.
Intel first announced the Ultrabook specifications in May, noting "tablet-like features," form factors less than 20mm thick and the sub-$1000 price target. The company hopes to achieve a 40 percent consumer laptop market share by the end of 2012. However, some analysts were less than impressed by the standard, calling it simply a "makeover" of the faltering netbook category.
Meanwhile, Apple continues to see success with its ultra-thin MacBook Air. Last October, the company added an 11.6-inch model and dropped the starting price to $999. In July, Apple again updated the line, adding Sandy Bridge processors, Thunderbolt I/O and backlit keyboards. Like its predecessor, the new MacBook Air was an instant hit.
25 Comments
I can't believe that those Wintel manufacturers want to be subsidized by Intel to build ultrabooks. Those Windows PC vendors don't even have to sell ultrabooks if they don't want to. It's their choice. Who knows, there may be plenty of consumers out there that have no interest in buying MacBook Air-class notebooks. These companies better learn how to build higher-quality, higher-cost notebooks and be able to get consumers to buy them just as Apple does. Intel isn't in the subsidy business. They have to make profits just like any other company. I'm sure these Wintel PC companies can't threaten Intel to give them processors at a lower cost unless they're buying them in bulk quantities. I guess Apple should have asked Intel to give Apple a break on costs when they first switched over to Intel chips, so Apple would be able to compete with the Wintel platform easier.
The Wintel vendors always used to mock Apple for charging customers so much for computers with equal or less features than what the Wintel computers offered. Now, I guess the tables have turned and they're begging to be helped to undercut Apple still. I thought the whole idea of an "open" platform was to be able to build less expensive computing devices than closed ones. Every time Apple goes after some segment of the consumer market, the PC boys always have to try to beat Apple when they could just go after a different type of consumer than Apple.
Odo - the problem is that they won't sell any if they have to price them higher than Apple does.
What happened to that "Apple Tax" they were always complaining about?
Besides, if others build These Ultrabooks, won't they be in the same position they are now with the iPad? Too late to market with crappy software? Seems to me a lot of effort to catch up will just be history repeating itself for these PC makers.
But I am sure that smarter people then me have already figured out how to overcome this, or will sink their companies trying.
I guess this will demonstrate the value of the short term thinking vs. The long view.
These companies better learn how to build higher-quality, higher-cost notebooks and be able to get consumers to buy them just as Apple does. Intel isn't in the subsidy business. They have to make profits just like any other company. I'm sure these Wintel PC companies can't threaten Intel to give them processors at a lower cost unless they're buying them in bulk quantities.
I'm not so sure.
This isn't an Intel-vs-MacBook Air story, it actually has very little to do with the MBA.
This is actually all about Intel-vs-ARM.
Intel are trying to get all of the OEM's to get in line behind these x86 reference designs so that by the time Windows 8 hits Intel will be closer to having a competitive ultra-portable/tablet offering.
This is mentioned in the article. There needs to be a reason for an OEM follow Intel's reference design where they could otherwise build something from an ARM supplier for much less.
As computing gets more mobile Intel will need a lot of the OEM's following their reference designs in order to get the economies of scale to be competitive against ARM.
So I'll say again, I'm not so sure. Something has to give here, and I have a feeling it might end up being Intel's margins.
Odo - the problem is that they won't sell any if they have to price them higher than Apple does.
They are still in a no win situation. Even if they sold them for 50% less than Apple they won't sell any. Well not enough to gain traction. They will always look like netbooks to the consumer.