JP Morgan: Ultrabooks unlikely to drive PC growth in 2012
A new analysis from investment bank J.P. Morgan says Windows-based ultrabooks are unlikely to achieve similar success as Apple's MacBook Air in their first generation and will not become "meaningful enough" to drive growth in the notebook PC market until at least 2013.
Analyst Mike Moskowitz issued a "Quick Thoughts" note to investors on Tuesday calling ultrabooks "just more of the same in PCs." He viewed the new category of laptops as drawing heavily on Apple's design cues from the MacBook Air, which first arrived in 2008.
"It seems that everyone wants to be like Apple," he said. "All of this market emulation of Apple is ironic, in our view, given the initial skepticism that the MacBook Air received."
Intel introduced the ultrabook design specification last May at the Computex trade show. The chipmaker set an optimistic goal of reaching a 40 percent share of the consumer laptop market by the end of this year.
The analyst voiced skepticism that Intel will manage to reach that goal. He did, however, point out that, technically, the MacBook Air meets the requirements for an ultrabook. "Given the MacBook Air’s success, this dynamic may be leading to Intel’s somewhat optimistic view of the Ultrabook adoption rate," he wrote.
Side-by-side comparison of Lenovo ultrabook (left) with Apple MacBook Air (right)
The major obstacles that Moskowitz sees for ultrabooks in the near- to mid-term are price points, lengthening PC replacement cycles and increased competition from smartphones and tablets for IT dollars. According to him, customers who pass up the MacBook Air will be looking for "meaningful discounts" on Windows-based ultrabooks. Those discounts, however, appear to have been deferred until the next generation of ultrabooks arrive late this year and in 2013.
Taiwan's DigiTimes reported on Tuesday that ultrabook prices will likely drop 20 to 30 percent in early March to April ahead of the release of Intel's next-generation Ivy Bridge platform in April.
On a slightly positive note, the analyst's research indicated that PC makers have not built up a large stockpile so the likelihood of a "supply chain bubble" is low. Reports from late last year suggested that ultrabook makers were slashing production of the devices after early sales proved "unsatisfactory."
Moskowitz attributed some of the decline in PC sales to a focus by vendors on price takedowns rather than technology advancements. Apple, however, bucked the trend by continuing to innovate "with an acute focus on the user experience, targeting both feature and form factor differentiation," the analyst noted.
The Average Selling Price of consumer notebooks has declined in recent years. | Source: Gartner and J.P. Morgan
"Given this market disparity, we believe that Intel is trying to breathe new life into the PC industry by adopting a page from Apple’s playbook: push a feature-rich, easy-to-use mobile product family that competes on more than just price," he said.
However, J.P. Morgan is doubtful that Intel's efforts will take. Moskowitz characterized Apple's MacBook Air as a one-of-a-kind success story that was highly unlikely to transfer to ultrabooks.
"We do not believe Ultrabooks can jumpstart the growth trajectory of the notebook PC market in 2012," he said. "The MacBook Air form factor has been a success for Apple, but we are skeptical that similar success can be replicated by Windows-based Ultrabooks in the first generation."
The analyst went on to compare the 2012 ultrabook situation to last year's tablet push: "a lot of sell-in from Apple look- alikes but with little sell through."
Intel reportedly expects more than 75 different ultrabooks to be introduced this year. In Moskowitz's view, the high number of unique, but barely differentiated, models could "overwhelm or confuse potential customers."
Moskowitz noted that the MacBook Air saw a 69.3 percent three-year compound annual growth rate through the third quarter of 2011. By comparison, the total notebook PC market had a CAGR of 15.8 percent during the same period.
Apple's MacBook Air achieved impressive sales growth after the company and introduced an 11-inch model in 2010. An update last July added the Thunderbolt I/O and a significant boost in speed by way of Intel's Sandy Bridge CPUs. According to one estimate, the thin-and-light notebook made up 28 percent of Apple's notebook sales last October, compared to just 8 percent in June 2011.
The analyst said he doesn't see ultrabooks posing much of a threat to the MacBook Air until their pricing falls below $800 since Apple has the benefit of first-mover advantage, optimized feature set and form factor. He expects the number of ultrabook models to "double or triple" in the second half of 2012 and simultaneously dismissed the new laptops as "noise" that will not affect the MacBook Air's "accelerating growth dynamics."
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Comments
It will take a year for component prices to come down where Apple's competitors can make a profit and compete, by then Apple will have done something to move the stakes again.
Just as the PC industry gets their 'MacBook Airs' to market Apple smacks them down again with larger MacBook Airs (i.e. MacBook Pros) with the same awesome styling and build quality.
Then, while they're down, the iPad 3 comes along and takes their wallets.
Ouch.
2012 may be a painful lesson-learning year for the PC industry.
Who in their right mind would spend their precious money on some pathetic looking knockoff when they can get the original for a pretty cheap price? And to top it all off, they get the amazing and great OS X with it. Hell, if somebody wants to, they can even install Windows on their Mac, and have both OSes on their Mac, not that I would ever install Windows on any of my machines of course.
And those no talent PC makers are finding out that it's not that easy to deliver on the price points that they were initially hoping for. It turns out that the Macbook Air is priced to be very affordable. Would somebody rather buy an original painting by Picasso or a painting by some drunken bum sitting on a street corner who copied one of Picasso's paintings if they both were similarly priced?
If I ever saw anybody with one of those ultrabooks that looks like a Macbook Air ripoff, then I'd instantly know that that person has no taste, no style and no clue. I'd also question their overall intelligence and their decision making ability.
As ever!
1. Apple comes out with something never before seen, or makes it usable for the first time.
2. Competitors denounce it. Trolls rush to agree.
3. It succeeds wildly. Apple must have brainwashed people, because obviously Apple never makes anything actually worthwhile.
4. Competitors copy it. Trolls now love it, but only without the Apple logo (nor Apple quality).
Mouse-based personal computing.
3.5? floppy drives.
USB.
Built-in wireless.
Trackpads.
All-in-ones.
Modern smartphone (exists instead of BlackBerry-style because others copied iPhone).
iPad (?just a big smartphone??and we know how Apple-haters loathe big smartphones).
App Store.
Plugin-free browsing.
Thunderbolt.
Legal downloadable music.
Voice-controlled assistant.
You name it... Apple made it work right?or even invented it from the ground up?and yet it?s not worth a thing while it flies off the shelves. Until the moment it gets copied (in a sort-of-halfway way).
1. Apple comes out with something never before seen, or makes it usable for the first time.
2. Competitors denounce it. Trolls rush to agree.
3. It succeeds wildly. Apple must have brainwashed people, because obviously Apple never makes anything actually worthwhile.
4. Competitors copy it. Trolls now love it, but only without the Apple logo (nor Apple quality).
I agree! That's pretty much how it goes each time Apple comes out with something that's totally new and amazing.
Mouse-based personal computing.
3.5” floppy drives.
USB.
Built-in wireless.
Trackpads.
All-in-ones.
Modern smartphone (exists instead of BlackBerry-style because others copied iPhone).
iPad (“just a big smartphone”—and we know how Apple-haters loathe big smartphones).
App Store.
Plugin-free browsing.
Thunderbolt.
Legal downloadable music.
Voice-controlled assistant.
And to further illustrate that 'de-innovating' technologies is just as important as innovating them:
Losing the Floppy Drive
Losing the Optical Drive
Losing the Hard Drive
...would all like apologize for being late to your post - their car broke down.
1. Apple comes out with something never before seen, or makes it usable for the first time.
2. Competitors denounce it. Trolls rush to agree.
3. It succeeds wildly. Apple must have brainwashed people, because obviously Apple never makes anything actually worthwhile.
4. Competitors copy it. Trolls now love it, but only without the Apple logo (nor Apple quality).
I don't know if the above post is revisionist history or not, but I thought that the MacBook Air wasn't a sales success until the late 2010 models came out (the redesigned model which saw the introduction of the 11" MBA). Before then, it was pretty much a flop by all accounts.
My wife has a 2009 MacBook Air (128GB) and it runs hot and the battery life is atrocious. I had a 2010 13" MacBook Air (128GB) and its battery life easily doubled hers. I now currently have a 2011 MacBook Air (128GB) and am loving it.
I don't know if the above post is revisionist history or not, but I thought that the MacBook Air wasn't a sales success until the late 2010 models came out (the redesigned model which saw the introduction of the 11" MBA). Before then, it was pretty much a flop by all accounts.
it was not a flop. it was pretty in line with others macbook, but the ssd option was not often purchased
it changed with the ssd macbook air, yes, that was a success, the mba took over the macbook and ssd was viable for consumers.
The PC vendors, except Apple, all raced to the bottom by cutting quality along with price, and as a result also cut profits.
Intel sees the trend of ARM moving in to capture the low end, which is now dominated by cheap POs, oops I mean PCs.
Intel introduces the "ultrabook" concept to try and force the PC manufacturers to emulate the Apple model and start to offer quality and innovative computers.
The PC manufacturers of course then do all that they know how to do, they copy Apple's looks but cut quality along with price, and as a result also cut profits with slimmer and lighter POs, oops I mean PCs.
What Intel failed to realize is that the only way that the remaining PC vendors, except Apple, know how to compete is on price, and the majority of people who are willing to buy a Wintel machine only really care about price.
This is an exercise in futility. Intel should have been more than happy to sell their chips to Apple at the high end of the market and their chips to everyone else at the low end instead of wasting everyone's time and money trying for this fool's gambit. I mean I could see this if Apple weren't using Intel processors, but what did Intel think it was going to gain by antagonizing Apple by trying to turn the entire PC industry against them by trying to force the entire PC industry to copy their products?
If I were Apple I would be more than a little pissed about this move. Maybe enough to dump a few billion into AMD to see about having them supply a chip competitive to Intel's chip for future products. Or perhaps to start working with Nvidia about seeing where this whole high performance ARM processor thing is going.
Really, I don't see what Intel was hoping to gain by doing this other than pissing off Apple and pushing them towards someone else.
They do the same things for Apple in Macbook Air.
So why is Intel subsidization some customers with hundreds of millions of dollars when they only combat Apple who also uses Intel stuff?
The only logical reason is that Intel knows that Apple will switch to ARM someday. And Apple should do it. The integrated platform makes it possible for Apple to have same/better performence on ARM then Intel.
Intel have to use brute force approach since its a fragmented platform. Apple can use SIMD/ALTIVEC and GPU acceleration since they know that every single A4 and onward have NOVA SIMD. Apple do even custom design its A class SoCs to include extra stuff that Apple wants. Intel would never do that.
Intel spending over 300 million on combatting Apple just shows how desperate they are. I also think its illigal to subsidize just some customers. Why doesn't Apple get some Intel money?
To bad that Intel and Apples relationship have gone bad and that Intel now tries to punish Apple by subsidizing other PC vendors.
It will be a great day when we stop play with X86 and move back to RISC. With universal binaries Apple could have continued to support both PPC and Intel. A PowerMac with IBM Power7 processors are in a totally different performance class then playX86 platform. Or why not use the 128 thread SPARC stuff.
The companies we are talking about, they pay people. The issue isn't that they raced to the bottom and now copy apple. It is that they have destroyed their owners wallets and ultimately are going to have to fire people.
Apple can't keep the tech economy afloat, it won't hire all the people who lose their jobs.
Some people remember with sadness the pathetic mismanagement that destroyed Commodore. They had great products but derailed them. The current situation is an on mass version of same.
HP was renowned for quality, dell had a great business model, IBM made great workhorses. So much for all that.
This situation reminds me of the great workstation collapse, Apollo, DEC, SGI, Sun and more. All crushed under the force of the increasing ability and lower price of Windows boxes. Now the same thing is happening to the PC market (which I consider to have evolved into the workstation market).
None of that loss was cool and nothing to be proud about, it was bad management in the face of change. More so, not recognizing change until too late to be able to change.
It is not Apple that is breaking all these companies, it is themselves, the people that run them. To have failed to recognize that the performance curve had exceeded the majority of tasks, that computing was moving to the real mass market, that it has shifted from computer user to professional to consumer.
You might sell a box to a content creator, but you won't sell 1000 boxes to view that content on.
Anyway, perhaps we could skip waving the Apple flag while laughing and just recognize a lot of people work for companies that won't be able to pay them and that they didn't change with the time..
If you see an ex HP employee on the street asking for a job to feed their family. Give them a hand.
So, let me see if I understand this correctly.
The PC vendors, except Apple, all raced to the bottom by cutting quality along with price, and as a result also cut profits.
Intel sees the trend of ARM moving in to capture the low end, which is now dominated by cheap POs, oops I mean PCs.
Intel introduces the "ultrabook" concept to try and force the PC manufacturers to emulate the Apple model and start to offer quality and innovative computers.
The PC manufacturers of course then do all that they know how to do, they copy Apple's looks but cut quality along with price, and as a result also cut profits with slimmer and lighter POs, oops I mean PCs.
What Intel failed to realize is that the only way that the remaining PC vendors, except Apple, know how to compete is on price, and the majority of people who are willing to buy a Wintel machine only really care about price.
This is an exercise in futility. Intel should have been more than happy to sell their chips to Apple at the high end of the market and their chips to everyone else at the low end instead of wasting everyone's time and money trying for this fool's gambit. I mean I could see this if Apple weren't using Intel processors, but what did Intel think it was going to gain by antagonizing Apple by trying to turn the entire PC industry against them by trying to force the entire PC industry to copy their products?
If I were Apple I would be more than a little pissed about this move. Maybe enough to dump a few billion into AMD to see about having them supply a chip competitive to Intel's chip for future products. Or perhaps to start working with Nvidia about seeing where this whole high performance ARM processor thing is going.
Really, I don't see what Intel was hoping to gain by doing this other than pissing off Apple and pushing them towards someone else.
The way their industry is structured, Windows PC manufacturers have no choice but to compete on price. Because they all run the same OS, they are all producing a basically generic product, and as in all generic products, competition is waged in pricing not features. So where is the profit generated in the WinPC market? The big monopoly profits are harvested by Microsoft of course who can set pretty much any price they want on Windows because the PC mfrs have no other alternative.
I don't see why Apple should be pissed at Intel pushing ultrabooks. Apple doesn't generate enough business for Intel, why would Intel not seek to generate other sales avenues? And AMD? AMD doesn't have the R&D muscle to keep up with Intel, and if Apple wants to be in the technology vanguard, it has to stick with Intel.
If Apple can sue over the design rip offs for iPad why can't they do the same for the MBA designs?
Who says they can't? I'd bet its more of a 'just haven't yet' situation.
The way their industry is structured, Windows PC manufacturers have no choice but to compete on price. Because they all run the same OS, they are all producing a basically generic product, and as in all generic products, competition is waged in pricing not features. So where is the profit generated in the WinPC market? The big monopoly profits are harvested by Microsoft of course who can set pretty much any price they want on Windows because the PC mfrs have no other alternative.
That is patently untrue. Even when running the same OS, the companies could compete on:
- Quality
- Support
- Configurability
- Design (think ToughBook, for example)
- Features
Arguing that simply because they run the same OS that they are commodities is false.
I don't see why Apple should be pissed at Intel pushing ultrabooks. Apple doesn't generate enough business for Intel, why would Intel not seek to generate other sales avenues? And AMD? AMD doesn't have the R&D muscle to keep up with Intel, and if Apple wants to be in the technology vanguard, it has to stick with Intel.
You really don't see why Apple would be upset? They create a new product which does very well - and Intel subsidizes Apple's competitors so they can better compete. You really can't see the problem with that? Amazing.
Furthermore, your argument doesn't carry any weight. It is unlikely that Intel will sell many more chips by subsidizing Ultrabooks. I can't imagine very many people buying a system because it's $1100 instead of $1200. What the subsidy does is change the market share so fewer of those systems are from Apple, but won't actually increase the overall system sales significantly. So Intel's actions hurt Apple and don't have much benefit for Intel. Apple has every right to be upset.
Why doesn't Apple get some Intel money?
Supposedly they do not get a subsidy because they don't have those 'Intel Inside' stickers on them. But when looking for a link I came up with something better: no one is getting Intel Money:
Intel denies reports of ultrabook hardware subsidies (The Verge)
Supposedly they do not get a subsidy because they don't have those 'Intel Inside' stickers on them. But when looking for a link I came up with something better: no one is getting Intel Money:
Intel denies reports of ultrabook hardware subsidies (The Verge)
Shoot. That's what we get for believing Digtimes:
"Earlier this week, Digitimes reported that Intel is providing $100 "marketing subsidies" for ultrabook manufacturers in order to lower hardware prices, but Intel's Bill Calder told CNET today that "there is no $100 subsidy for ultrabooks," and that "the report from Digitimes was false.""