Ultrabooks headed for 5-10% price drop in early 2012
Prices for laptops in Intel's "Ultrabook" category are expected to fall below $1,000 by the end of this year and may drop as much as 10 percent in the first quarter of 2012 with the help of a $100 marketing subsidy from Intel, according to a new report.
Taiwan-based supply chain makers told industry publication DigiTimes that Ultrabook makers Acer, Asustek and Toshiba will lower their retail prices this holiday season. Meanwhile, Lenovo, Hewlett-Packard and Dell have geared up to launch their own Ultrabooks this month, sources said.
The report went on to note that a marketing subsidy from Intel may contribute to further price cuts in the range of 5 percent to 10 percent early next year. Sources said the chipmaker's partners have had a tough time meeting the sub-$1,000 goal for their Ultrabook models.
According to them, a 13-inch SSD-equipped Ultrabook has an estimated bill of materials (BOM) of $690. OEM costs are approximately $100, and marketing and distribution costs run $150, bringing the total cost to $940. Insiders estimated that the CPU, 128GB SSD and LCD panel cost $175-200, $140-150 and $45-50, respectively.
Intel took the wraps off its Ultrabook design guidelines earlier this year. Qualifying machines will be less than 20mm thick and cost less than $1,000.
Thomas Kilroy, the company's senior vice president and general manager of its sales and marketing group, said during the design's unveiling that Ultrabooks will benefit from "a massive campaign by Intel in 2012."
PC makers reportedly lobbied Intel for a 50 percent price cut on CPUs bound for Ultrabooks, in an attempt to compete with Apple's MacBook Air pricing. Intel instead opted to offer a 20 percent discount to "first-tier notebook players."
Though the chipmaker is aiming for the specification to account for 40 percent of laptops by the end of 2012, Ultrabook makers have been cautious with their initial shipments. Some companies were said to be "testing the waters" with shipment volumes of less than 50,000. Acer and Asus are believed to have slashed their Ultrabook orders by 40 percent because of unsatisfactory demand.
Research firm Canalys sees price as a difficult obstacle for Ultrabook makers. The firm does see Ultrabooks becoming an important segment of notebook sales over the next five years, but, in the meantime, Apple is expected to take the top spot among PC vendors if iPads are included in the figures.
"For Ultrabooks to become widespread, prices have to drop considerably," said analyst Michael Kauh. "The least expensive models are currently around $800, a real barrier to mass consumer uptake. As more vendors embrace the Ultrabook design, component costs should drop and mainstream consumer prices will be achieved."
Apple has squeezed its competitors with aggressive pricing of the MacBook Air. In 2010, the Mac maker introduced an 11-inch MacBook Air model, cutting the entry-level price from $1,499 (for the previous 13-inch model) to $999. According to one recent report, Apple will drop the prices of its thin-and-light notebooks even further in coming months to clear out inventory for a new series. Rumors have also suggested that a 15-inch MacBook Air will arrive in the first quarter of 2012.
With the new models, Apple has seen the MacBook Air's share of its total Mac shipments swell in recent months. According to Morgan Stanley and NPD, the ultra-thin notebooks now comprise 28 percent of the company's notebook shipments, which are already at record levels.
Taiwan-based supply chain makers told industry publication DigiTimes that Ultrabook makers Acer, Asustek and Toshiba will lower their retail prices this holiday season. Meanwhile, Lenovo, Hewlett-Packard and Dell have geared up to launch their own Ultrabooks this month, sources said.
The report went on to note that a marketing subsidy from Intel may contribute to further price cuts in the range of 5 percent to 10 percent early next year. Sources said the chipmaker's partners have had a tough time meeting the sub-$1,000 goal for their Ultrabook models.
According to them, a 13-inch SSD-equipped Ultrabook has an estimated bill of materials (BOM) of $690. OEM costs are approximately $100, and marketing and distribution costs run $150, bringing the total cost to $940. Insiders estimated that the CPU, 128GB SSD and LCD panel cost $175-200, $140-150 and $45-50, respectively.
Intel took the wraps off its Ultrabook design guidelines earlier this year. Qualifying machines will be less than 20mm thick and cost less than $1,000.
Thomas Kilroy, the company's senior vice president and general manager of its sales and marketing group, said during the design's unveiling that Ultrabooks will benefit from "a massive campaign by Intel in 2012."
PC makers reportedly lobbied Intel for a 50 percent price cut on CPUs bound for Ultrabooks, in an attempt to compete with Apple's MacBook Air pricing. Intel instead opted to offer a 20 percent discount to "first-tier notebook players."
Though the chipmaker is aiming for the specification to account for 40 percent of laptops by the end of 2012, Ultrabook makers have been cautious with their initial shipments. Some companies were said to be "testing the waters" with shipment volumes of less than 50,000. Acer and Asus are believed to have slashed their Ultrabook orders by 40 percent because of unsatisfactory demand.
Research firm Canalys sees price as a difficult obstacle for Ultrabook makers. The firm does see Ultrabooks becoming an important segment of notebook sales over the next five years, but, in the meantime, Apple is expected to take the top spot among PC vendors if iPads are included in the figures.
"For Ultrabooks to become widespread, prices have to drop considerably," said analyst Michael Kauh. "The least expensive models are currently around $800, a real barrier to mass consumer uptake. As more vendors embrace the Ultrabook design, component costs should drop and mainstream consumer prices will be achieved."
Apple has squeezed its competitors with aggressive pricing of the MacBook Air. In 2010, the Mac maker introduced an 11-inch MacBook Air model, cutting the entry-level price from $1,499 (for the previous 13-inch model) to $999. According to one recent report, Apple will drop the prices of its thin-and-light notebooks even further in coming months to clear out inventory for a new series. Rumors have also suggested that a 15-inch MacBook Air will arrive in the first quarter of 2012.
With the new models, Apple has seen the MacBook Air's share of its total Mac shipments swell in recent months. According to Morgan Stanley and NPD, the ultra-thin notebooks now comprise 28 percent of the company's notebook shipments, which are already at record levels.
Comments
So Intel is giving discounts on CULV chips to companies using their ultrabook base design but Apple, the company that buys a great many of these expensive CULV chips isn't get this discount? I hope Intel isn't pissing off Apple or their longterm plan to prevent ARM from invading low-power notebooks might end up backfiring. We already the OS X kernel already runs, and runs well, on ARM, and that Windows 8 will support ARM.
Well first of all, do we know for a fact that Apple didn't get a sweet deal? I mean, Tim Cook's supply chain skills are supposed to be legendary. And if Apple is "pissed" about it, they would do what they've always done: renegotiate the terms of their deal with Intel. It's just business. You make it sound like Apple and Intel are jealous lovers. (That's Apple and Google
Well first of all, do we know for a fact that Apple didn't get a sweet deal? I mean, Tim Cook's supply chain skills are supposed to be legendary. And if Apple is "pissed" about it, they would do what they've always done: renegotiate the terms of their deal with Intel. It's just business. You make it sound like Apple and Intel are jealous lovers. (That's Apple and Google
Pissed wasn't the best choice of words. That makes it sound more emotional and less strategic than I intended. My point is that Apple is a "keystone" PC company that drives trends and with Win8 already headed for ARM/x86 and OS X's kernel already there and designing their own ARM-based packages Intel losing a company like Apple once quad-core A15 or better chips come along could be very bad for the nptebook market for Intel.
Apple isn't AMD where you can knee cap them and drive them into a small niche.
You're going to piss off your shareholders with such early '90s tactics.
Glad I don't own any Intel stock.
If Intel is subsidizing other OEMs to destroy Apple, they deserve to lose.
I don't think a direct attack on Apple is Intel's intention unless Intel already knows that Apple will not be using them in the future. From the information we have I think it's to stave off PC makers going with ARM in the future.
If Intel is subsidizing other OEMs to destroy Apple, they deserve to lose.
Intel would pay Apple the same amount if it put the Intel Inside logo on their machines, and had that Intel chime on all their TV commercials.
They have been pretty reasonable partners for Apple for the most part, designing specific versions of chips, and even releasing them to Apple before other partners.
Intel would pay Apple the same amount if it put the Intel Inside logo on their machines, and had that Intel chime on all their TV commercials.
They have been pretty reasonable partners for Apple for the most part, designing specific versions of chips, and even releasing them to Apple before other partners.
I expected someone to make that point about the Intel Inside stickers. It's good point but there is a potential counterargument with Apple only using Intel chips for all Macs. Has this been done simply because Intel was the best option for all Macs or is there an agreement between Apple and Intel that gives Apple certain privileges if they only use Intel CPUs. Sticking with one vendor is fairly unique for Apple.
As for the custom chips, there is no better PC company to showcase and provide custom CPUs with than Apple. They are doubly ideal because of their monopoly on premium PCs and their mindshare.
If Apple drops intel and switches to ARM processors, however, my brief love affair with the brand is going to come to a screeching halt. When I pull out my laptop, I need processing power, otherwise I would have gotten an iPad and Bluetooth keyboard. I know Apple purists have this hate/hate relationship with Intel, but seriously, time to get over it.
I don't see how this is going to help PC mfgs in the ultrabook space. Why do they always want to race to the bottom? You would think the shareholders of these companies would be tired of incessant razor thin margins because CEOs think about nothing but price, price, price. How about making a better product and differentiation for a change?
Stevo was right, it's a mug's game practiced by many in business!
Well first of all, do we know for a fact that Apple didn't get a sweet deal? I mean, Tim Cook's supply chain skills are supposed to be legendary. And if Apple is "pissed" about it, they would do what they've always done: renegotiate the terms of their deal with Intel. It's just business. You make it sound like Apple and Intel are jealous lovers. (That's Apple and Google
They probably do get a good deal as one of their larger customers. But still, that's because of sales numbers. But, if these companies are getting an additional $100, because they're concerned about low sales, then Apple should demand the $100 as well. I would.
I would think any discounts available to one OEM would be available to them all. So Apple should reap the benefits of any marketing subsidies or other discounts too. They might have to change some of their marketing approach to get the $100 per, but it should be available to them.
I don't see how this is going to help PC mfgs in the ultrabook space. Why do they always want to race to the bottom? You would think the shareholders of these companies would be tired of incessant razor thin margins because CEOs think about nothing but price, price, price. How about making a better product and differentiation for a change?
asian companies have always operated like this
take hardware designed by others, add software designed by another company and make a product on a somewhat open standard. only way to compete is on price so keep on making it cheaper
I would think any discounts available to one OEM would be available to them all. So Apple should reap the benefits of any marketing subsidies or other discounts too. They might have to change some of their marketing approach to get the $100 per, but it should be available to them.
Even though the deal must be available equally (since Intel has a dominant market position and can can not abuse its market power), that doesn't mean that Apple will use it. The deal might well require the OEM to put 'Intel inside' stickers on their computers and/or put Intel in their advertising. Apple generally doesn't do that, so they would miss out on the deal.
Now, $100 per unit is pretty significant and probably larger then previous deals, so it's not impossible that Apple would change their mind and agree to it. After all, $100 times 3 or 4 million MBAs a year would be pretty significant. (Of course, the deal may also have a "can not be combined with other discounts' restriction, so Apple may not be able to use it, anyway).
I don't see how this is going to help PC mfgs in the ultrabook space. Why do they always want to race to the bottom? You would think the shareholders of these companies would be tired of incessant razor thin margins because CEOs think about nothing but price, price, price. How about making a better product and differentiation for a change?
It's not a race to the bottom. They're looking for an edge against the largest supplier in this space. A $100 cost advantage goes a long way. It most certainly doesn't preclude differentiating their product. In fact, a differentiated product with $100 price cut is the best of both worlds.
As far as ARM goes they will be a hard sell to Apples more informed users. Or maybe I should say more demanding users. The need for X86 compatibility is and will be important to a large segment of Apple users for some time.
More importantly ARM is currently only 32 bit. Again you have the real issue of many people actually using the address space provided by 64 bits. Not to mention the very easy nature of running other OS's in VMs.
Now saying that I believe Apple will make an ARM based notebook like device play. However that device will not be a Mac. You are right in the sense that ARM is bad for Intels low end. ATOM so far has been a joke as even AMD makes better chips. The problem with ARM won't be performance but compatibility, for those that need compatibility. Apple will have to be awfully careful about how they approach ARM in portables.
Pissed wasn't the best choice of words. That makes it sound more emotional and less strategic than I intended. My point is that Apple is a "keystone" PC company that drives trends and with Win8 already headed for ARM/x86 and OS X's kernel already there and designing their own ARM-based packages Intel losing a company like Apple once quad-core A15 or better chips come along could be very bad for the nptebook market for Intel.
Apple is a huge buyer of Intels notebook chips, that alone would put them at the top as far as discounts go. More so intel can't legally maneuver to far outside of giving discounts based on anything other than volume. This due their near monopoly in the processor business.
As far as ARM goes they will be a hard sell to Apples more informed users. Or maybe I should say more demanding users. The need for X86 compatibility is and will be important to a large segment of Apple users for some time.
More importantly ARM is currently only 32 bit. Again you have the real issue of many people actually using the address space provided by 64 bits. Not to mention the very easy nature of running other OS's in VMs.
Now saying that I believe Apple will make an ARM based notebook like device play. However that device will not be a Mac. You are right in the sense that ARM is bad for Intels low end. ATOM so far has been a joke as even AMD makes better chips. The problem with ARM won't be performance but compatibility, for those that need compatibility. Apple will have to be awfully careful about how they approach ARM in portables.
I agree completely. I don't foresee an ARM-powered MBP any time soon.
If AMD ever gets its act together, I could see Apple using AMD in MBP, but there's no sign that AMD is competitive with Intel's latest offerings on a performance/watt basis.
I do, however, anticipate an 'iPad Pro' which could have a similar configuration to the MacBook Air, but run iOS on ARM. Basically, Apple's equivalent of a netbook. Won't do anything too powerful, but perfectly fine for games, Internet, and even light word processing and spreadsheets.