Ultrabooks still trying to find their niche

High prices could stifle ultrabook adoption over the next few years

Despite backing from the top PC makers, high prices and a disorganized software and hardware ecosystem could slow adoption of ultrabooks over the next few years, analysts said this week.

Intel is promoting ultrabooks as a new category of thin and light laptops with tablet-like features. But with prices starting at US$899, and PC makers seeking to position the systems as possible tablet competitors, it could take a few years for ultrabooks to be widely adopted, analysts said.

Ultrabooks look like Apple's MacBook Air, but are slightly thinner and can run a full Windows OS. Intel has said it will equip ultrabooks with tablet features such as touchscreens, long battery life, instant-boot features and always-on connectivity in the coming years. Ultrabooks use components such as low-power memory -- usually found in smartphones and tablets -- to extend battery life.

Early ultrabooks without touchscreens were recently announced starting at US$899, and top U.S. PC makers aired support for ultrabooks this week. Hewlett-Packard announced the Folio ultrabook, and Dell said it would launch an ultrabook in the next few months.

"What's happening is a normal evolution of the laptop form factor. It's going from thick and heavy to thin and light," said David Daoud, research director of personal computing at IDC.

Intel expects ultrabooks to account for 40 percent of consumer laptops shipped by the end of next year. Intel's expectations may not be met primarily because of high pricing, Daoud said.

The $899 starting price is high in a price-sensitive market, Daoud said. Intel has said prices would come down to $699 by the end of next year, but if consumers are wary of spending due to a recessionary climate, the machines may not be taken up in volume at that price.

The price point is especially a challenge for buyers in the U.S. and Western Europe, who are struggling economically, Daoud said. PC shipments are growing in emerging markets, but buyers in China and India tend to buy low-margin products and could skip ultrabooks, Daoud said.

Nevertheless, PC makers are looking at ultrabooks as an opportunity to grow their PC business, Daoud said. Tablets haven't helped companies like HP, Dell and Acer, and ultrabooks could be a way to revive the PC business.

Vendors are hoping to position ultrabooks as tablet-like devices, but the comparison won't make much sense to consumers until Windows 8 is available. PC makers will not be pitching ultrabooks as an iPad alternative, said Roger Kay, president of Endpoint Technologies Associates.

"It's not a comfortable time for the OEMs, but things will get better a year from now," Kay said. "They will have a better OS ... and silicon."

However, by the time Windows 8 comes out, ultrabooks could have competitors in laptops using ARM processors, which will support Microsoft's upcoming OS. That could tilt the usage model around ultrabooks, and PC makers will have opportunities to explore relationships outside the traditional Wintel alliances, Kay said.

Windows 8 ultrabooks could be good business laptops because of mobility and support for legacy x86 software, which ARM will struggle with, Kay said.

Volume ultrabook shipments are not expected until the laptop prices fall, according to Stephen Baker, vice president at NPD. But if the products attract buyers at $799 or $899, it could an "interesting market," Baker said.

PC makers could choose to sell ultrabooks as high-end products with larger profit margins, much like Apple with the MacBook Air, Baker said. Alternatively, a price of $699 represents a volume opportunity for ultrabooks, and as the price falls, the product could take off with consumers over the next few years.

"There needs to be an upgrade to the ecosystem and component availability," Baker said

Research firm IHS iSuppli this week predicted that ultrabook shipments will be 136.5 million in 2015, up from less than 1 million this year.

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Agam Shah

IDG News Service
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