Intel refuses to slash CPU pricing for laptop makers building Ultrabooks

Intel refuses to slash CPU pricing for laptop makers building Ultrabooks

Summary: The see-saw battle continues between Intel and the notebook vendors it's wooing to create its new Ultrabooks. Manufacturers have complained that part costs are too high to sell the systems for $1,000 or less, and Intel has not only thrown big marketing money their way, but also supplied a bill of materials that shows that the magic price point for Ultrabooks can be reached.

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The see-saw battle continues between Intel and the notebook vendors it's wooing to create its new Ultrabooks. Manufacturers have complained that part costs are too high to sell the systems for $1,000 or less, and Intel has not only thrown big marketing money their way, but also supplied a bill of materials that shows that the magic price point for Ultrabooks can be reached.

The biggest sticking point is clearly the price of the Core i5 and i7 processors Intel wants inside Ultrabooks, which run around $300. The chip giant is offering vendors a 20-percent discount, but according to DigiTimes, is balking at the 50-percent discount that manufacturers are seeking to prop up their own profit margins.

Intel is refusing because it would depress prices for its mobile CPUs across the board, impacting its profitability. The company currently earns 60-percent gross margins on its processors. Laptop makers counter that the high price for the chips will limit their own profitability in selling Ultrabooks, which Intel has predicted will account for 40 percent of the notebook market by the end of next year.

By holding firm to its prices, Intel is taking a risk that AMD's low-power notebook offerings won't be a more attractive proposition to buyers looking to spend less than a grand on a new laptop, and that its Ultrabooks are in the same league as the MacBook Air, which has clearly inspired the new platform. With the first Ultrabooks set to debut soon, we won't have long to wait to see if the strategy was worth it to Intel.

Topics: Processors, Hardware, Intel, Laptops, Mobility

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  • understandable

    But Intel processor is too expensive, consumes too much power.
    That is why MS want to get ARM train.
    ZenithY
  • You can make a little money ...

    Like Ive said many times, you can make a little money or you can make no money, you're choice.

    My laptop has an i5 because I wasn't sureAMD would do what was needed, then Wife got an Athlon which I realize I could have gotten by on. And AMD had "better" chips at the time so ...

    Intel better work something out, the i5 unit isn't worth double the cost of the AMD laptop, something I'm going to keep in mind the next round of laptop buying.

    So Intel, you can make a little money or you can make none. You're choice.
    rmhesche
  • you get what you pay for

    Intel is banking on demand. I'd spend extra to get an i5 or i7 based notebook, for what I need a computer for they perform better than equivalent AND chips.

    Though I have to admit I've not laid hands on an AMD phenom quad of any kind...

    Loving the i5 in my main server here, though. The AMD it replaced was always overheating, I always had a question of reliability in the back of my mind. The i5 barely breaks a sweat under the highest loads I can toss at it.
    pgit
  • Intel can't get its act together

    This is another example of how Intel has fallen victim to the "IBM" or "Microsoft" disease. They're a big, bloated bureaucratic company that can do only one thing well: make processors for PCs. It's been years now that they've known their products for smartphones and tablets just didn't meet the market needs, yet all they can do is make empty promises. Apple was smart and bought their own ARM design house early on. Microsoft didn't change course in time, and now won't be able to deliver products for the tablet market for another year or so. Both Apple and Microsoft had to spend hundreds of millions of dollars because the processor company they both depended on couldn't deliver.

    Now Intel wants all the PC companies to follow them off the cliff of the "Ultrabook". Looks like they've followed Apple's lead and aren't buying.

    Intel really isn't an industry leader anymore.
    wilback
    • RE: Intel refuses to slash CPU pricing for laptop makers building Ultrabooks

      @wilback - You may want to look at the specs on the MacBook Air, Apple's "Ultrabook"... i5 and i7 Intel processors. Also, while it is true Intel only does one thing well... It is making processors... not "PC" processors. Intel has there processors in everything these days, including the iPhone. It's not the main processor of the phone... but it is in there. I wouldn't count Intel out just yet.
      cstoner
  • RE: Intel refuses to slash CPU pricing for laptop makers building Ultrabooks

    Intel is looking with covetous eyes at Apple's market. Apple completely dominates the +1,000 USD market. It owns that segment while other OEMs have commoditized laptops, net books, et al. Apple's reputation is not shared by any OEM out there for that reason. Before the next geek begins shouting about how expensive Macs are the fact of the matter is that if you spec a Wintel laptop out the same as a Mac you're paying just as much if not more.
    Intel wants to expand into that market segment at the expense of OEMs who, frankly, haven't a clue how to build one (without taking a look at Macs), how to market them, or how to polish reputations that have been damaged beyond repair in the rush to the bottom of the past decade or more.
    dheady@...
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