Ultrabook makers 'testing the water' with initial shipments under 50k - report
Several key partners in Intel's "Ultrabook" initiative are limiting the initial shipment volumes of their responses to Apple's MacBook Air to below 50,000 units due to uncertain demand, a new report claims.
DigiTimes named first-tier notebook vendors such as Acer, Lenovo, Toshiba and Asustek as "testing the water" with small initial shipments of new thin-and-light models, according to sources from the notebook makers. The vendors are scheduled to begin shipping their ultrabook models later this month.
Meanwhile, Intel is hosting a conference for ultrabooks later on Sept. 14 in hopes of drumming up further support for the specification and resolving some "technology bottlenecks" that are getting in the way of the design.
Unresolved issues over cost and technologies have given rise to a "conservative attitude" among the vendors, the report noted.
Intel introduced the ultrabook design specifications in May, taking cues from both the iPad and the MacBook Air. The new laptops are meant to incorporate "tablet-like features" with a "thin, light and elegant design" without compromising on computing power and performance, all while remaining in the sub-$1,000 price range.
Toshiba's recently-unveiled Z830 ultrabook
"Here the magic price seems to be $1,000, but it appears that the PC makers are really struggling to make this price point and still preserve a modicum of profit for themselves," said analyst Richard Windsor. "This is the major reason why we do not believe that the ultrabook segment is really going to take off until next year."
PC makers have faced significant challenges in matching the features of the MacBook Air while competing on price. CEO Tim Cook is credited with fine-tuning Apple's supply chain, leveraging volume purchasing and pre-paying in cash to produce savings that rivals are unable to keep up with. For instance, Intel's ultrabook partners have reportedly been unable to secure necessary magnesium-aluminum components and production capacity for the chassis of their devices.
Intel has responded by creating a reference bill of materials that theoretically shows the notebooks can be produced for as little as $475 and as high as $710. Vendors have called for a 50 percent price cut, but the chipmaker has agreed to only a 20 percent discount to its first-tier partners.
The world's largest chipmaker has also backed the initiative with a $300 million ultrabook fund that will invest in companies working on solutions to challenges to the new notebook specification.
DigiTimes named first-tier notebook vendors such as Acer, Lenovo, Toshiba and Asustek as "testing the water" with small initial shipments of new thin-and-light models, according to sources from the notebook makers. The vendors are scheduled to begin shipping their ultrabook models later this month.
Meanwhile, Intel is hosting a conference for ultrabooks later on Sept. 14 in hopes of drumming up further support for the specification and resolving some "technology bottlenecks" that are getting in the way of the design.
Unresolved issues over cost and technologies have given rise to a "conservative attitude" among the vendors, the report noted.
Intel introduced the ultrabook design specifications in May, taking cues from both the iPad and the MacBook Air. The new laptops are meant to incorporate "tablet-like features" with a "thin, light and elegant design" without compromising on computing power and performance, all while remaining in the sub-$1,000 price range.
Toshiba's recently-unveiled Z830 ultrabook
"Here the magic price seems to be $1,000, but it appears that the PC makers are really struggling to make this price point and still preserve a modicum of profit for themselves," said analyst Richard Windsor. "This is the major reason why we do not believe that the ultrabook segment is really going to take off until next year."
PC makers have faced significant challenges in matching the features of the MacBook Air while competing on price. CEO Tim Cook is credited with fine-tuning Apple's supply chain, leveraging volume purchasing and pre-paying in cash to produce savings that rivals are unable to keep up with. For instance, Intel's ultrabook partners have reportedly been unable to secure necessary magnesium-aluminum components and production capacity for the chassis of their devices.
Intel has responded by creating a reference bill of materials that theoretically shows the notebooks can be produced for as little as $475 and as high as $710. Vendors have called for a 50 percent price cut, but the chipmaker has agreed to only a 20 percent discount to its first-tier partners.
The world's largest chipmaker has also backed the initiative with a $300 million ultrabook fund that will invest in companies working on solutions to challenges to the new notebook specification.
Comments
Kind of like the non-iPad tablet "segment"? Good luck with that.
First of all, this reflects the basic fact that the Windows PC market isn't really receptive to this category. Dell's Adamo was a commercial failure and PC manufacturers are well aware of that.
Secondly, these PC manufacturers are probably wary of another TouchPad debacle. HP cancelled their media tablet shortly after launch, sold off channel inventory at liquidation prices, then apparently had their manufacturing partners build more units to soak up parts already committed in various supply contracts.
Lastly, there are no volume discounts for such small production runs. They aren't releasing millions of MacBook Airs. Apple has benefited from leveraging their iDevice supply chain mastery to Mac production. Most Windows PC manufacturers have no significant smartphone/media tablet business and can't reap the benefits of massive contracts for things like NAND flash memory and LCD panels.
Frankly, I'm not sure if PC buyers will make this a viable category. It may end up being like the iPad/non-iPad conundrum where buyers will pay a thousand bucks for a MacBook Air, but won't pay more than five hundred or six for a similar Windows PC. The HP TouchPad showed that the marketplace accepts the iPad at one price point and everything else is devalued.
This looks like another PC Bataan Death March, a gruesome drive to the bottom. Someone should be able to compete with Apple's MacBook Air, but it will be with razor thin margins. We already know that Windows PC users rate lower than Mac users in terms of customer satisfaction. Apparently paying the "Apple tax" isn't such a hindrance to user satisfaction.
At this point one must ask the question, "If saving money is such a big deal why aren't Windows PC users happier?" Acer's management apparently took a deep look, fired their CEO, and basically admitted that their whole low-margin/we'll-make-it-up-on-volume business model was crap and a poor return on investment for their shareholders.
Have Windows PC manufacturers painted themselves into a shitty, low-margin unsatisfying corner where their main competitor innovates, generates high customer satisfaction and walks away with the lion's share of the industry's profits?
What exactly will happen next year that will change the situation? Apple still will be able to beat everybody on costs due to their volume, not having to pay the Windows tax, and having more flexibility in being able to design the computer. And Intel will get a swift kick by Apple and/or the FTC if they try to sell chips to Apple's competitors for less than they will sell those chips to Apple...
Premium tablet, not premium priced. What appeared to be a LOW price. Others thought they could beat it but their low end hardware did not cut it. Where in all this did you see me saying iPad was overpriced.
Ps i think apples success in the tablet space is really for the same reason. Apple released a premium tablet for what appeared to be a "low" price. Others thought they beat it, because they thought tablet as a low end netbook, rather than a high end mobile device. but low end os and hardware simply did not cut it in the tablet space for most people.
And yet, when competitors release media tablets at the same price as Apple's iPad, they fail miserably.
The HP TouchPad's closeout fire sale basically showed us how the random tech geek values non-Apple media tablets. They are worth $99, maybe $199. The BOM on the TouchPad has been estimated at $300.
The netbook market was already dying before the iPad showed up on the scenes. The smaller screen Linux-powered netbooks had disappeared, leaving mostly 10-11" devices running Windows.
And yet, when competitors release media tablets at the same price as Apple's iPad, they fail miserably.
The HP TouchPad's closeout fire sale basically showed us how the random tech geek values non-Apple media tablets. They are worth $99, maybe $199. The BOM on the TouchPad has been estimated at $300.
What do you mean and yet. That is the same point I was making.
This is a grim omen.
...
Superb overview - well-expressed. One of your best.
What do you mean and yet. That is the same point I was making.
You mentioned nothing about competitors and their tablet pricing. Apple released a premium-priced tablet.
This makes no sense. Based on all the Internet postings, we know that there is an Apple tax - meaning you pay more for the same thing just to get that Apple logo.
Not true. You get a hell of a lot more than just the logo. What do you think pays for those kids behind the counter that do the tech support and teach the classes for example. Even if you pay for the whole training program that doesn't cover it. $99 might be one part time person's weekly pay, but not a whole years worth of classes. And Apple Care is way cheaper than many of the parts they will put in your machine. Certainly cheaper than the labor. You go to many places and get a hard drive replaced, an OS installed and your data moved over to the new one and you'll pay $300 if not more just for labor.
You mentioned nothing about competitors and their tablet pricing. Apple released a premium-priced tablet.
Premium tablet, not premium priced. What appeared to be a LOW price. Others thought they could beat it but their low end hardware did not cut it. Where in all this did you see me saying iPad was overpriced.
This makes no sense. Based on all the Internet postings, we know that there is an Apple tax - meaning you pay more for the same thing just to get that Apple logo. However, according to the ultrabook situation Apple actually is selling a product for significantly less than other manufacturers are able to produce a similar item.
Wrong. You are confusing what they can do with what they are willing to do.
Peter Bright has done a great write up over at Ars Technica of the troubles Intel faces trying to herd the PC OEM's in this direction.
IMO I think they will get there. The threat from ARM to Intel's existence will ensure it (even if Intel have to start manufacturing the damn things themselves
This makes no sense. Based on all the Internet postings, we know that there is an Apple tax - meaning you pay more for the same thing just to get that Apple logo.
Nah, those are inane ramblings on Internet forums from tech junkies, not real users.
The fact of the matter is that Apple users have far higher customer satisfaction ratings than non-Apple users, whether it be smartphones, personal media players, media tablets, or computers. If saving money is really great, why aren't more Android/iRiver/TouchPad/Acer owners happier with their devices?
Premium tablet, not premium priced. What appeared to be a LOW price. Others thought they could beat it but their low end hardware did not cut it. Where in all this did you see me saying iPad was overpriced.
You edited your post after my comment, twenty-eight minutes after your original reply. I am done with this discussion.
This makes no sense. Based on all the Internet postings, we know that there is an Apple tax - meaning you pay more for the same thing just to get that Apple logo. However, according to the ultrabook situation Apple actually is selling a product for significantly less than other manufacturers are able to produce a similar item. Combine this information with all the Me Too Tablets that cost the same thing as the overpriced iPad, and my mind is gonna explode!
As you said, the "Apple tax" is just a product of Internet forums. Now that you mention the Apple tax, I'd like to mention the Microsoft tax. Did you know that Microsoft's profit margins are a lot higher than Apple's? You read me right. Microsoft's gross margins can be as high as 60%.
Also, your Apple logo argument is flawed. You're making it sound as though someone can build a computer in their garage, spray-paint an Apple logo on the box and sell it for double what it would normally cost. How did the Apple logo get there? By being designed by Apple. The Apple logo represents something. So Apple customers pay for what that logo represents-design quality, user interface, etc.
Also, I want to get back to your argument about the Apple tax. I see it as a tradeoff. With Apple, customers may pay more upfront but the subsequent costs are less. For example, in most cases, if you go into an Apple Store with computer trouble, they just give you a new Mac. Also, Apple software is significantly cheaper than comparable Windows software, e.g. word processing. Contrast that with Windows PCs. The front-end cost is less. But things like Windows software are very expensive.
Lastly, you mention that the iPad is overpriced. By who's definition? As I see it, overpriced is a subjective term. In my opinion, consumers buy something only when they believe the product is worth what they are paying for it. By this logic, consumers will not buy an iPad unless they believe that they will get the value equal to what they pay for it. So in other words, consumers will not buy it if it is overpriced.
This makes no sense. Based on all the Internet postings, we know that there is an Apple tax - meaning you pay more for the same thing just to get that Apple logo.
I think you get more than just “that Apple logo”.
Windows and Mac OS X are poles apart in terms of usability, aesthetics, software integration, etc.
What represents “value for money” probably depends on whether the consumer views the product as a means to an end or whether they value the experience of using the product as a whole (in which case they are most definitely not "the same thing").
The fact of the matter is that Apple users have far higher customer satisfaction ratings than non-Apple users, whether it be smartphones, personal media players, media tablets, or computers. If saving money is really great, why aren't more Android/iRiver/TouchPad/Acer owners happier with their devices?
If you have already determined that cost doesn't affect user satisfaction ratings then why bother going on about it?
This makes no sense. Based on all the Internet postings, we know that there is an Apple tax - meaning you pay more for the same thing just to get that Apple logo. However, according to the ultrabook situation Apple actually is selling a product for significantly less than other manufacturers are able to produce a similar item. Combine this information with all the Me Too Tablets that cost the same thing as the overpriced iPad, and my mind is gonna explode!
Its called "Internet Trolls throwing a hissy fit over Apple". Apple equipment can be very surprising when you get a like-for-like comparison. £1800 for my iMac, monitor costs £999 from Apple or £1000+ from a competitor, so £800 for the computer underneath is a fantastic price when the i7 chip inside it at the time was £400 off the shelf.
£1800 for my iMac, monitor costs £999 from Apple or £1000+ from a competitor, so £800 for the computer underneath is a fantastic price when the i7 chip inside it at the time was £400 off the shelf.
Out of interest which iMac (27" i assume?) and competitors monitor were you looking at?
This is a grim omen.
First of all, this reflects the basic fact that the Windows PC market isn't really receptive to this category. Dell's Adamo was a commercial failure and PC manufacturers are well aware of that.
Secondly, these PC manufacturers are probably wary of another TouchPad debacle. HP cancelled their media tablet shortly after launch, sold off channel inventory at liquidation prices, then apparently had their manufacturing partners build more units to soak up parts already committed in various supply contracts.
Lastly, there are no volume discounts for such small production runs. They aren't releasing millions of MacBook Airs. Apple has benefited from leveraging their iDevice supply chain mastery to Mac production. Most Windows PC manufacturers have no significant smartphone/media tablet business and can't reap the benefits of massive contracts for things like NAND flash memory and LCD panels.
Frankly, I'm not sure if PC buyers will make this a viable category. It may end up being like the iPad/non-iPad conundrum where buyers will pay a thousand bucks for a MacBook Air, but won't pay more than five hundred or six for a similar Windows PC. The HP TouchPad showed that the marketplace accepts the iPad at one price point and everything else is devalued.
This looks like another PC Bataan Death March, a gruesome drive to the bottom. Someone should be able to compete with Apple's MacBook Air, but it will be with razor thin margins. We already know that Windows PC users rate lower than Mac users in terms of customer satisfaction. Apparently paying the "Apple tax" isn't such a hindrance to user satisfaction.
At this point one must ask the question, "If saving money is such a big deal why aren't Windows PC users happier?" Acer's management apparently took a deep look, fired their CEO, and basically admitted that their whole low-margin/we'll-make-it-up-on-volume business model was crap and a poor return on investment for their shareholders.
Have Windows PC manufacturers painted themselves into a shitty, low-margin unsatisfying corner where their main competitor innovates, generates high customer satisfaction and walks away with the lion's share of the industry's profits?
I think those Windows users actually want low-cost crappy devices. They don't think that anything decent is worth paying for. Consumers need to realize you pretty much get what you pay for. If Steve said that Apple can't figure out how to make a decent tablet for under $500, he was probably telling the truth. Remember that before the iPad came out, it was said the price point would be slightly under $1000. Forget those BS-telling Droidtards that think it's so easy to build decent $300 tablets. Apple was building a decent, sturdy tablet (all metal case) with a high-quality 9.7" display for a base price of $500 and good customer support to back it up. Companies selling low-quality junk and no customer support shouldn't even be patronized by consumers. Consumers should never have purchased those lousy Windows netbooks just to "save" money. They weren't worth it even at any low price.
In a way, corporations could be blamed for buying low-cost crap computers for their employees. Having corporate bean counters always choosing equipment from the lowest bidder isn't always the best way to go. I don't believe for a second that all consumers want low-quality junk. Yeah, if a person really, really can't afford a decent product that's one thing, but I think most Americans can afford and want higher-quality devices that last longer and serve them better.
As long as Apple continues to increase its economies of scale and sincerely wants to build high-quality devices, there won't be a company around that will be able to compete with it on a cost/quality basis. The higher the production runs Apple has the better margins Apple will make and if they turn some of that money back into manufacturing R&D, even better products will be made for the same amount of money. I hope consumers continue to avoid buying those substandard Android tablets for years to come.