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PC makers want cheaper Intel chips to compete with Apple's Air pricing

post #1 of 103
Thread Starter 
Struggling to compete with the pricing of Apple's MacBook Air lineup, "Ultrabook" PC makers have again asked Intel to reduce the price of its mobile CPUs.

Executives from both Acer Taiwan and Compal Electronics have turned to Intel and asked the chipmaker to aid them in achieving pricing below $1,000, according to DigiTimes. Intel has partnered with PC makers to push a new specification, dubbed "Ultrabook," designed to compete with Apple's popular thin-and-light MacBook Air.

Scott Lin, president of Acer Taiwan, reportedly said that his company is likely to adopt a lower-end processor or reduce component specifications to meet the sub-$1,000 price goal. He said Intel refuses to provide vendors like Acer with a subsidy on CPU prices.

Intel allegedly hopes to have 40 percent of consumer notebooks be super-light Ultrabooks in the future. But Ray Chen, president of Compal Electronics, said he thinks it's unlikely Intel will achieve that goal with current pricing.

"He added that if Ultrabooks suffer from weak sales, while Apple continues to enjoy strong profit, the Wintel alliance will need to do something or else all the related IT player may be gone together," the report said.

Price issues have been a recurring theme in the Ultrabook saga, as PC makers have failed to match the pricing on Apple's MacBook Air lineup. A month ago, Intel was said to have denied a request from PC makers for a steep 50 percent discount on CPUs for the Ultrabook specification.

In addition to struggling with pricing, Ultrabook makers have also had to contend with Apple's dominance in the overseas supply chain. In August it was said that Ultrabook makers were out-muscled by Apple for acquiring unibody metal chassis for ultraportable notebooks.



Apple's MacBook Air lineup starts at $999 with the low-end 11.6-inch model, and Intel hopes to compete with Apple on pricing. But some of the first Ultrabook models announced were priced well above the $1,000 threshold, such as Asustek's 13.3-inch UX31 at $1,600.

Intel's Ultrabook design calls for systems to retail for less than four figures and sport form factors that are no more than 20 millimeters thick, with "tablet-like features" in a "thin, light and elegant design." The new MacBook Air design first released in late 2010 has proven to be so popular that it even prompted Apple to discontinue its white entry-level MacBook, which also sold for $999.
post #2 of 103
But the MacBook Air uses Intel chips!

So, if Intel lowers the price of their chips, then the MacBook Air can go lower on price.
post #3 of 103
"Apple's MacBook Air lineup starts at $999 with the low-end 11.6-inch model, and Intel hopes to compete with Apple on pricing."

Not sure that I understand that statement. Maybe it should read other Intel customers hope to compete ...

Chris
post #4 of 103
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post #5 of 103
Quote:
Originally Posted by cajun View Post

But the MacBook Air uses Intel chips!

So, if Intel lowers the price of their chips, then the MacBook Air can go lower on price.

Yeah, they're asking for a pricing advantage over Apple. There's no way Apple's buyers will let that slide. Only one buyer in the PC world has real leverage over suppliers, and that's Apple. All the rest are always at risk of going out of the business at any moment.
post #6 of 103
For years the PC business was dominated by manufacturers whose only skill was being able to assemble the same old components in a big plastic box for as little money as possible. Very few of these companies, Sony stands out as an exception, know the first thing about invention and industrial innovation so their only answer is to get the price of their components down. Why don't they try inventing something. Why would Intel, who in fact did invent something in this case, lower the price of their product and thus undercut sales of their very own chips in the Air. It makes no sense. Intel spent time and money developing a really tiny, low energy chip. Now they have to sell it out of the gate at a discount?
post #7 of 103
Acer is out to lunch. Intel processors are expensive. Windows is expensive. Ultra lightweight Windows laptops are based on Intel's reference platform which is also expensive. Apple uses Intel processors, but it relies on its own resources rather than the expensive Microsoft Windows and the expensive Intel reference platform. What this gets down to is that there is no substitute for innovation. Back in the late 1980s, the PC clone manufacturers came together to develop and adopt the EISA bus to replace IBM's ISA bus. They should come together again to develop an ultra lightweight laptop platform to reduce their total dependence on Intel. It is either this or oblivion.
post #8 of 103
Quote:
Originally Posted by MacRulez View Post

Inept whingers. If I had access to the fabrication Dell has access to, I could solve this problem for them in a day.

The amazing thing is that someone on a forum and Newegg can say this without blinking. Do you really think there aren't people at Dell who are as good at assembling a computer as you are? It's harder than you think, and I don't pretend to know why, but if your conclusion doesn't add up, check your premises.
post #9 of 103
In August it was said that Ultrabook makers were out-muscled by Apple for acquiring unibody metal chassis for ultraportable notebooks.



wait, didnt apple do the first true unibody?
:-D * * * * * * * * * * * * * * * *
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:-D * * * * * * * * * * * * * * * *
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post #10 of 103
Quote:
Originally Posted by cajun View Post

But the MacBook Air uses Intel chips!

So, if Intel lowers the price of their chips, then the MacBook Air can go lower on price.

I'm glad this was the first post because this whole story didn't make sense because of that very fact...
Just say no to MacMall.  They don't honor their promotions and won't respond to customer inquiries.  There are better retailers out there.
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Just say no to MacMall.  They don't honor their promotions and won't respond to customer inquiries.  There are better retailers out there.
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post #11 of 103
Geez, what a bunch of whiny beggars. What's with all these international companies asking the US company who is trying to save their butts for a handout? Seriously? Compete or die.
post #12 of 103
Quote:
Originally Posted by cameronj View Post

The amazing thing is that someone on a forum and Newegg can say this without blinking. Do you really think there aren't people at Dell who are as good at assembling a computer as you are? It's harder than you think, and I don't pretend to know why, but if your conclusion doesn't add up, check your premises.

He didn't say he would do their job for them in a day... he said he would solve the "problem". In the absence of real innovation of their own, the problem is to get a pair of balls and get radical and follow Apple all the way -- for example, drop the optical drive and legacy ports as he said. There, problem solved. Design by committee is half their problem. I think most of us on this forum could walk into most PC box assemblers and solve half their problems. Their managers should just read this forum
post #13 of 103
Quote:
Originally Posted by sandau View Post

In August it was said that Ultrabook makers were out-muscled by Apple for acquiring unibody metal chassis for ultraportable notebooks.

This is silly.

First, there are ways to build a computer other than using machined aluminum.

Second, aluminum machining capability is available in thousands, if not millions, of shops around the country. There's no way Apple has monopolized the aluminum milling market.

Bottom line is that Apple can do it with Intel's old prices - and still yield a nice margin. There's no intrinsic reason why Ultrabook makers can't do it, too. Even Apple's vaunted volume advantage is not that big a deal. Volume reduces costs dramatically on some things, but not on machined parts. There, the volume savings are much more modest. And most of the other components are industry standard (CPU, RAM, screen, power supply, etc).

It would be interesting to see why they're finding it so hard. My guess is that they don't get the entire Ultrabook concept and they're trying to jam it full of everything from serial ports to parallel ports to 10Base2 connectors along with Blu-Ray and 100 other things that the machine doesn't need.
"I'm way over my head when it comes to technical issues like this"
Gatorguy 5/31/13
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"I'm way over my head when it comes to technical issues like this"
Gatorguy 5/31/13
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post #14 of 103
Quote:
Originally Posted by cajun View Post

But the MacBook Air uses Intel chips!

So, if Intel lowers the price of their chips, then the MacBook Air can go lower on price.

Exactly what I was thinking - Apple buys chipsets from Intel. I wonder how much of the rest of the logic board is Apple's design? How does Apple do it anyway? They have a large margin on sales, so other makers should be able to match prices if they used a lesser margin than apple.
post #15 of 103
Quote:
Originally Posted by jkichline View Post

Geez, what a bunch of whiny beggars. What's with all these international companies asking the US company who is trying to save their butts for a handout? Seriously? Compete or die.

Given that they've just seen the U.S. government illegally stop companies from failing, they're pretty much justified in their mindset of "talk to a U.S. company to get free crap for doing absolutely nothing and whining about it long enough."

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already fucked.

 

Reply

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already fucked.

 

Reply
post #16 of 103
Quote:
Originally Posted by Tallest Skil View Post

Given that they've just seen the U.S. government illegally stop companies from failing, they're pretty much justified in their mindset of "talk to a U.S. company to get free crap for doing absolutely nothing and whining about it long enough."

I assume you are talking about the bank bailout. What crimes were committed? Or are you talking about the bailout of GM and Chrysler? In that case, I ask again what are the specific illegalities to which you refer or is this just wing nuttery on the wrong forum. Try Kos or Red State.
post #17 of 103
Quote:
Originally Posted by strask View Post

I assume you are talking about the bank bailout. What crimes were committed? Or are you talking about the bailout of GM and Chrysler? In that case, I ask again what are the specific illegalities to which you refer or is this just wing nuttery on the wrong forum. Try Kos or Red State.

Oh, forgot about the banks. I'm talking about favoritism in what's supposed to be a free market economy.

However, that's secondary to the point I'm making. I knew people wouldn't give a crap about the real point, though.

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already fucked.

 

Reply

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already fucked.

 

Reply
post #18 of 103
deleted
post #19 of 103
To complete with Apple mobiles.
MS donates windows for free.
MS subsides PC manufactures.
MS doesn't charge app developers.
MS does an emulator equal to Mac OS 8.6
MS gets about 8% to 10% of internet use with above.

MS uses Safari as default browser.
Internet use goes up to 30% share.

MS bought by Google.
0% share.
post #20 of 103
Quote:
Originally Posted by MacRulez View Post

+1

I don't understand this kvetching. Just drop the optical drive and the legacy ports, make it slim, and ship it. Don't talk about it, do it.

A quick visit to NewEgg.com gets me all the components I need for relatively little money; the only things not available off the shelf are the enclosure and the motherboard to fit into it.

The problem is not the CPU. It's the form factor fabrication.

There's nothing stopping them from doing this right now except their own inability to execute.

Inept whingers. If I had access to the fabrication Dell has access to, I could solve this problem for them in a day.

right on, also, apple has a lock on the machines to make the case, others can't and use other materials, apple has them buffaloed and they want to blame someone
they want an excuse to put out junk and blame others, they can't compete on price, logistics (thank you tim cook) costs, etc
so let them put out junk and compete with that

just wait till apple uses a6 a7 of there own design in the macbook line wow bloodbath
I APPLE THEREFORE I AM
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I APPLE THEREFORE I AM
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post #21 of 103
Quote:
Originally Posted by cajun View Post

But the MacBook Air uses Intel chips!

So, if Intel lowers the price of their chips, then the MacBook Air can go lower on price.

Yes Apple will also be able to reduce prices. However, Apple's market is the above 1000$ market. The pc makers have the sub 1000$ market. So even though all prices will come down, it is important for pc makers to get below the 1000$ level EVEN if Apple's prices come down as well.
post #22 of 103
Quote:
Originally Posted by jragosta View Post

This is silly.

First, there are ways to build a computer other than using machined aluminum.

Second, aluminum machining capability is available in thousands, if not millions, of shops around the country. There's no way Apple has monopolized the aluminum milling market.

Actually if you root around the internet a little you'll find a report saying that the companies that build the NC machines to perform the fine aluminum machining that ultra books require are all tapped out supplying Apple's requirements (i.e. Apple's contract mfrs who have committed their capacity to Apple) so there really is limited aluminum machining capacity out there to service Apple's competitors.
post #23 of 103
Quote:
Originally Posted by AppleInsider View Post

Struggling to compete with the pricing of Apple's MacBook Air lineup, "Ultrabook" PC makers have again asked Intel to reduce the price of its mobile CPUs.

Executives from both Acer Taiwan and Compal Electronics have turned to Intel and asked the chipmaker to aid them in achieving pricing below $1,000, according to DigiTimes. Intel has partnered with PC makers to push a new specification, dubbed "Ultrabook," designed to compete with Apple's popular thin-and-light MacBook Air.

Let me see if I've fully grasped this novel concept:

Rather than reduce internal costs such as wages, salaries and benefits; become more cost-effective in marketing, distribution, and sales methods & procedures; improve assembly and product testing through quality and benchmarking initiatives; and institute policies designed specifically to reduce overall intra-company costs, Acer & Compal are requesting specific component manufacutrers to lower THEIR costs? What a unique and self-serving approach to conducting business in the 21st century.
post #24 of 103
Oh my gosh. Quit with the whining already! Why do PC mfgs want so desperately to engage in the 'race to the bottom'? It makes no sense for Intel to sacrifice margin for anyone. It doesn't matter who makes the ultra portables, Intel still gets the same amount of money.

Now, if sales of ultra-portables sucked rocks, or if there was any real competition from AMD in the space, then it would be in Intel's interest to shave some margin and/or produce a lower cost part. But right now, neither of these situations exist, so why do PC mfgs expect a hand out?

Ok, so let's say they finally persuade Intel to lower the price on CPUs, and ultrabooks come in just under $999 on the low end... So, Apple would then be able to sell the Macbook Air for say $959 because the CPUs will cost less for them too. How does this help anyone?

You might say price reductions benefit the consumer, but they don't really, because in the grand scheme of things the PC mfgs will have cut corners to reduce the price (they're already doing that) thereby producing poor quality products which have to be replaced more often, and Intel will be less profitable which means they'll have less money to spend on R&D and/or raw materials...

All these things come full circle and end up depressing the world economy and eroding the purchasing power of people's money. Arbitrarily reducing margin is a stupid thing to do. Now, if cost reductions can be made due to lower material costs, improved technology or processes, these are a benefit to consumers and businesses alike, because the margin stays the same and the product quality it not decreased.

So, PC mfg weenies, do some R&D and find improved tech/processes and stop your dam n complaining!
post #25 of 103
Quote:
Originally Posted by Tallest Skil View Post

Oh, forgot about the banks. I'm talking about favoritism in what's supposed to be a free market economy.

However, that's secondary to the point I'm making. I knew people wouldn't give a crap about the real point, though.

Favoritism isn't illegal though - it's what all of the perfectly legal 'donations' to the politicians gets you. But it still has nothing at all to do with these companies asking Intel to lower chip pricing.
post #26 of 103
Tim Cook locked in production, got best price clauses in the contracts, and put the money up front. He might have even bought the production lines. These others can't touch that unless they put up big money. Looks like some companies are paying for squeezing the margins for all these years.
post #27 of 103
Quote:
Originally Posted by mrstep View Post

Favoritism isn't illegal though - it's what all of the perfectly legal 'donations' to the politicians gets you.

Fine, fair enough. Needs to be illegal, then, but fine.

Quote:
But it still has nothing at all to do with these companies asking Intel to lower chip pricing.

Eh, I see some operational similarities. The situation's certainly different, but operationally, this is exactly what's happening. Companies looking for handouts when they refuse to do the job on their own.

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already fucked.

 

Reply

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already fucked.

 

Reply
post #28 of 103
Quote:
Originally Posted by mytdave View Post

Oh my gosh. Quit with the whining already!

Agreed, sounds like a seafood dinner. Wine and crab...
post #29 of 103
Quote:
Originally Posted by 80025 View Post

Let me see if I've fully grasped this novel concept:

Rather than reduce internal costs such as wages, salaries and benefits; become more cost-effective in marketing, distribution, and sales methods & procedures; improve assembly and product testing through quality and benchmarking initiatives; and institute policies designed specifically to reduce overall intra-company costs, Acer & Compal are requesting specific component manufacutrers to lower THEIR costs? What a unique and self-serving approach to conducting business in the 21st century.

Yeah! Right! Apple never pressures suppliers.
post #30 of 103
Quote:
Originally Posted by NOFEER View Post

right on, also, apple has a lock on the machines to make the case, others can't and use other materials, apple has them buffaloed and they want to blame someone
they want an excuse to put out junk and blame others, they can't compete on price, logistics (thank you tim cook) costs, etc
so let them put out junk and compete with that

just wait till apple uses a6 a7 of there own design in the macbook line wow bloodbath

Yep, they could go ahead and product other types of cases themselves, but then they would have to actually work to design those cases themselves and work out how to handle the different thermal specs since they couldn't just piggyback on someone else's reference specs.

As someone said, these clone makers just aren't set up to design and innovate. It's definitely a joke considering the 'Apple tax' stuff people still spout off about. Whether it's the iPad, the Air, the iMac (and maybe even the Pro's in the future?), these knockoff companies can't catch Apple on making a NICE machine.

Of course Intel is worried - if they can't get more Ultrabooks out at decent prices, they're afraid they're going to get eaten alive when the ARM Win8 laptops show up that are cheaper at the same form factor. I'm not sure that's quite valid when those ARM notebooks won't actually run the x86 Windows software, but I'm sure that's a large part of Intel's underlying insecurity.
post #31 of 103
Quote:
Originally Posted by Tallest Skil View Post

Oh, forgot about the banks. I'm talking about favoritism in what's supposed to be a free market economy.

However, that's secondary to the point I'm making. I knew people wouldn't give a crap about the real point, though.

I give a crap. I just didn't know what you meant by illegal. And there's no free market economy any more than Yellowstone is a true wilderness.
post #32 of 103
Quote:
Originally Posted by Jacksons View Post

Yeah! Right! Apple never pressures suppliers.

If negotiating a sales contract equates to pressure, than possibly. However, in this case, the request for component price reductions appears to be predicated solely on one company's perceived need to be more competetive with another company. And in this case, with the component manufacturer footing the bill.
post #33 of 103
Quote:
Originally Posted by Jacksons View Post

Yeah! Right! Apple never pressures suppliers.

Apple does indeed pressure suppliers, but not in the same way. They don't whine and ask for a hand out - what they do is negotiate - they say, hey look, we want X million parts for X dollars, if you can do that, we have a deal, if you can't we'll go buy them from company Y. They also have the the cash to pay up front, which can look very appealing to a supplier, and result in better pricing.
post #34 of 103
Quote:
Originally Posted by 80025 View Post

If negotiating a sales contract equates to pressure, than possibly. However, in this case, the request for component price reductions appears to be predicated solely on one company's perceived need to be more competetive with another company. And in this case, with the component manufacturer footing the bill.

Now you are just playing with words.
post #35 of 103
Quote:
Originally Posted by Tallest Skil View Post

Fine, fair enough. Needs to be illegal, then, but fine.

Yep, it should be, as should a lot of what our fearless leaders are up to, from illegitimate wars to general economic and trade policy that actively pushes jobs overseas when there are no legitimate alternatives domestically to replace them.

Quote:
Eh, I see some operational similarities. The situation's certainly different, but operationally, this is exactly what's happening. Companies looking for handouts when they refuse to do the job on their own.

Still don't think so. Intel is worried about the coming ARM laptop assault, not Apple specifically. They want all of the PC makers to have something as nice as the Air in order to keep a healthy market for their chips and prevent market movement to a competing CPU architecture. The PC clone makers aren't competent to do this design work, and Intel knows it, so it's in their interest to make it happen. (Apple is a much larger company than these other ones individually, and knows how to do actual work to make their products better, has margins that let it fund R&D, etc.)

As a second issue, Intel lending a hand with design is one piece, but these makers are pushing for chip price cuts to try to get themselves better margins on these machines using what they know are Intel's concerns over market share for extra pressure. That's business negotiating, but it's also a reflection of the fact that if THEY make these machines and they don't sell (and charging Apple prices for non-Apple machines may NOT sell well!), THEY sit on unsold inventory and eat the losses, not Intel.

So I just don't see this as equivalent to an auto maker or bank looking for a bailout or loan. These manufacturers aren't competent to do this work AND Intel has a huge vested interest in getting them to succeed - one that may be worth Intel cutting some of their margins to avoid a larger bleed.
post #36 of 103
Quote:
Originally Posted by cajun View Post

But the MacBook Air uses Intel chips!

So, if Intel lowers the price of their chips, then the MacBook Air can go lower on price.

Thank you!!!!!!!!!!!!! That was the first thing I thought of when I read the article. makes me think that the article is trash.
post #37 of 103
Quote:
Originally Posted by mytdave View Post

Apple does indeed pressure suppliers, but not in the same way. They don't whine and ask for a hand out - what they do is negotiate - they say, hey look, we want X million parts for X dollars, if you can do that, we have a deal, if you can't we'll go buy them from company Y. They also have the the cash to pay up front, which can look very appealing to a supplier, and result in better pricing.

And who is company Y when Intel is company X?
post #38 of 103
Quote:
Originally Posted by Jacksons View Post

Now you are just playing with words.

Then let me see if I can answer in a more age and developmentally appropriate manner for you.

Jimmy and Tommy have skateboards, which have similar features and functionality. The young men would like to purchase new skateboards. Jimmy takes on a paper route and forgoes his weekly candy bar to earn money and reduce his expenses for the purchase. Tommy companies bitterly to anyone within earshot about the price, and writes a letter to the company president. "If the folks who made the wheels didn't charge so much, I could afford a new skateboard. You should do something for ME!"
post #39 of 103
Quote:
Originally Posted by 80025 View Post

Then let me see if I can answer in a more age and developmentally appropriate manner for you.

Jimmy and Tommy have skateboards, which have similar features and functionality. The young men would like to purchase new skateboards. Jimmy takes on a paper route and forgoes his weekly candy bar to earn money and reduce his expenses for the purchase. Tommy companies bitterly to anyone within earshot about how the price, and writes a letter to the company president. "If the folks who made the wheels didn't charge so much, I could afford a new skateboard".

Thanks!
post #40 of 103
Quote:
Originally Posted by 80025 View Post

If negotiating a sales contract equates to pressure, than possibly. However, in this case, the request for component price reductions appears to be predicated solely on one company's perceived need to be more competetive with another company. And in this case, with the component manufacturer footing the bill.

I think they call it business. You can bet 1 billion dollars that Apple competes for the best price and capacity for manufacturing and yes suppliers may get squeezed. That is business and its doubtful Apple is running a charity.
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