Why Ultrabooks are falling well short of Intel's targets

2 Oct 2012
Dell XPS Ultrabook

IHS iSuppli has slashed its Ultrabook shipment predictions, but still expects one in three laptops to be the high-end devices in four years

An analyst firm has slashed by half its 2012 sales prediction for Ultrabooks, but lower prices and better chips could mean they eventually grab a third of the laptop market.

Ultrabooks first landed last year, as part of a $300m marketing campaign by Intel to boost innovation in the laptop market, push up margins for PC makers, and help the chip maker fight back against ARM, which has enjoyed greater success in the tablet market.

Analyst firm IHS iSuppli initially predicted 22m Ultrabooks would ship globally this year, but has slashed that to 10.3m, with more than half shipping in the fourth quarter.

With IDC predicting 209m laptops will ship this year, that means Ultrabooks are grabbing less than 5% of the market - well below Intel's hope of 40% market share by the end of this year.

Shipments will pick up in 2013, however, with IHS expecting shipments of 44m - down from its first prediction of 61m.

"So far, the PC industry has failed to create the kind of buzz and excitement among consumers that is required to propel Ultrabooks into the mainstream," said Craig Stice, senior principal analyst for compute platforms at IHS. "This is especially a problem amid all the hype surrounding media tablets and smartphones. When combined with other factors, including prohibitively high pricing, this means that Ultrabook sales will not meet expectations in 2012."

However, Stice suggested those problems can be easily overcome, and by 2016, IHS expects 95m Ultrabooks will ship - grabbing almost a third of the total laptop market worldwide.

In order for Ultrabooks to succeed, IHS said manufacturers and retailers need to get closer to the $600 to $700 price range.

"With the economy languishing, Ultrabook sellers may have trouble finding buyers at the current pricing, especially with fierce competition from new mobile computing gadgets such as the iPhone 5, Kindle Fire HD and forthcoming Microsoft Surface," Stice said.

At the moment, the average launch price of Ultrabooks released or announced in the US over the past year is $1,027 - well above the $510 average selling price of Windows-based laptops, according to analyst firm NPD in June.

However, Intel promised Ultrabook prices would fall to $699 this year, with HP already getting closer to the mark with a $799 Envy systems.

Devices such as HP's $579 Sleekbook - which runs AMD's chips, so can't be called an Ultrabook - may be the the ones to watch, noted IHS. "Another factor causing IHS to reduce the forecast is Intel’s increasingly stringent set of definitions for Ultrabooks," IHS said added. "Based on these designations, many notebooks once called Ultrabooks now are being classified as 'ultrathins'."

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