Can Wintel win the Ultrabook market?

Can Wintel win the Ultrabook market?

Summary: Battered by the iPad and the MacBook Air, PC makers and Intel are ganging up on Apple with Ultrabooks. Will this blunt Apple's attack, or be another profitless bit of me-too-ism by the 20th century anachronism known as Wintel?

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In 10 years Apple has re-defined music players, smart phones, tablet computers and, with the MacBook Air, the notebook computer. In the first 3 they've also gobbled up the lion's share of the profits.

Are they about to do it again with Ultrabooks?

The market share delusion Despite not having the largest unit shares in PCs and smartphones, Apple is the world's most valuable company. Why? Because its unit shares are very profitable.

Apple dominates over-$1,000 PC revenue with a 90% share. Tablets likewise. And they've re-invented the tough/SSD/lightweight/long battery life notebook - 1993's HP Omnibook 300 was first - with the MBA.

Their all-in-one iMac is the #1 AIO with a 32.9% unit share and, no doubt, most of the profits. So what does this tell us about the Ultrabook's chances?

Winning on price? Now, aided by an Intel war chest estimated at $300-$500 million, the PC vendors are striking back with the same tired "cheaper, not better" strategy that lost them the profitable markets segments in high-end PCs. Apple's economies of scale meant they had a tough time matching Apple's price.

But they'll get there soon, with prices starting as low as $599. So it's over, right?

No so fast Apple's strategy is to win the profitable sales, not volume. So the question is: can Apple retain significant differentiation that appeals to consumers affluent enough to support their higher entry-level prices?

Looking at Apple's key advantages:

  • Machined aluminum cases. Apple bought all the production capacity so competitors can't build them too.
  • SSDs. Besides buying half the world's output of flash, Apple has been a leader in embedding SSDs into products. Plus their recent acquisition of Anobit is another competitive edge.
  • Battery technology. Apple appears to have the lead here too, with batteries that support 1,000 recharge cycles - 5 years for most people - as well as furious research into fuel cells.
  • Thunderbolt. If ever a technology appealed to power users, Thunderbolt is it. PCs will start having it this year, but Apple's all-in support means it will probably have the largest total dollar market for Thunderbolt add-ons for the next 2 years or more, key for developers who have to adapt drivers.
  • Owning the high-end market. Apple claims over 90% of the over $1,000 PC revenue, so they already own the high-end customers who are the most likely buyers of Ultrabooks.

Against these advantages, the traditional PC vendor price advantage looks to be no more successful than it has in tablets.

Touch screen notebooks are stupid The MacBook Air already has a touch screen: the trackpad. It is easy to reach, supports a wide-range of user-selectable gestures - many compatible with the iPhone and iPad - and won't smear up the HD display. Touch screen Ultrabooks are a dumb idea.

The Storage Bits take Wintel will win the aggregate volume race - make an Ultrabook cheap enough, no matter how compromised, and someone will buy it - but 3 years from now an expanded MBA product line will have the revenue share lead and the lion's share of the profits.

Is there any hope for PC vendors? Yes, but it will take hard work and investment.

If Apple is the BMW of computers, there's an opening for a Toyota of computers: not the fastest or flashiest, but comfortable, reliable and practical. This machine needs lifetime virus protection built-in, easily upgradeable memory and storage (unlike the MBA) and a full-size keyboard.

But that's the kind of careful industrial design that PC vendors rarely bother with. So it looks like clear sailing for Apple in the Ultrabook wars.

Comments welcome, of course. I owned the Omnibook 300 and despite its anemic processor, reflective monochrome screen and high price, it was my all-time favorite Wintel PC.

Topics: Hardware, Apple, Laptops, Mobility

About

Robin Harris has been a computer buff for over 35 years and selling and marketing data storage for over 30 years in companies large and small.

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33 comments
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  • RE: Can Wintel win the Ultrabook market?

    Ultrabooks are a bunch of " Apple did it so I can too" wannabe notebooks. Once they descend into the ultra cheap hell, the OEMs will lose even more money.
    Rick_Kl
    • RE: Can Wintel win the Ultrabook market?

      Macbook Airs are great but they're ridiculously expensive. So many people want a decent computer but just can't afford Apple prices and you really don't have to sell a laptop at those prices to sell quality. I see Ultrabooks doing well, it won't be over night but give it a year or two.
      bradavon
      • RE: Can Wintel win the Ultrabook market?

        @bradavon If MBAs are so 'ridiculously' expensive why are OEMs whining about margins thinner than netbooks and having to be subsidized by Intel to reluctantly produce them? I think the perception of value plays more here than the reality of cost. Many PC folk are used to price points for WinTel junk when in fact Macs are quite competively priced when compared to like configured and quality built HPs, et al.
        dheady@...
      • I Just Converted to Apple! Never going back

        Hey Bradavon,

        Have you ever really taken the time to play with the new iMacs or Macbook Air? I thought Apple was a fad until I recently spent 30-minutes on a friend's iMac. Suddenly, I realized that all the PC makers make plasticky crud.

        Intel shouldn't have engaged in all the anticompetitive bribing and threatening over the last couple decades... The manufacturers would have had more mind for innovating, rather than just doing whatever Intel required - like being afraid of getting punished for using too many processors from Intel's competition.
        RichardEich
  • RE: Can Wintel win the Ultrabook market?

    There is room for all players and the PC market will produce models with removable screens that double as tablets. So the PC ultrabook will canabilise the Air and iPad matket.
    jatbains
  • RE: Can Wintel win the Ultrabook market?

    I find it hard understanding why people think the Ultrabook is competing with Apple.<br>Apple fans are going to stay Apple and may even increase, but the biggest competition to ultrabooks will come from ordinary notebook computer. I believe most notebooks will end up taking the form factor of the Ultrabooks in the long run." Who doesn't want a performance notebook in a lighter and less bulky package-if the price is right" Once it becomes cheaper for manufacturers to produce these at cheaper prices, It will take over the notebook market.<br>PS. Forget about the tablet replacing the notebook: I wont ever do my excel spreadsheets on a 10 inch screen with no keyboard. The stress will kill me.
    kwekut
    • RE: Can Wintel win the Ultrabook market?

      @kwekut: Good points. I totally agree. The only problem I see with Ultrabooks is the lack of a DVD drive. SSDs for instance will eventually come in decent storage sizes.
      bradavon
    • RE: Can Wintel win the Ultrabook market?

      @kwekut 2121

      But, but, but where are the 8 USB ports? Expansion slots? Ha, ha, ha...

      An Ultrabook is a minimalist design like the all-in-one desktop computer. Now these kind of computers are taking the lead. Apple had the future well in hand with the original iMac.
      studentrights
  • What is a win?

    If you consider volume and or market share the goal post then yeah eventually ultrabooks will win. If however you consider profit per each individual sale a win then likely Apple will win.

    Pagan jim
    James Quinn
    • RE: Can Wintel win the Ultrabook market?

      @James Quinn: Which has always been the case. PC OEMs make their money through bulk.
      bradavon
  • You should write an article with Adrian

    "the PC vendors are striking back with the same tired "cheaper, not better" strategy that lost them the profitable markets segments in high-end PCs"<br><br>He has claimed that any tablet that costs $500+ not made by Apple has absolutely no chance. So the "better, not cheaper" strategy is doomed as is the "cheaper, not better" strategy. "Not better, not cheaper" will fail for obvious reasons so the only thing left is "better, cheaper". Of course, that will quickly bankrupt a company since, as you pointed out, Apple has a stanglehold on the supply of parts. This is called a monopsony and is just as sick of a market as a monopoly is.<br><br>The other thing I find very interesting is how ultra books are nothing more than a natural evolution of previous laptops yet Apple gets the credit for inventing it. Ultrabooks are laptops that are thinner and more powerful than the laptops that preceeded them. They aren't used any differently than old laptops, have no extra functoinality or features, they run the exact same OS, have the exact same UI, they are simply faster and more portable than what came before. By that definition, every single generation of laptop have been "ultrabooks" when compared to the previous generation.<br><br>Some of Apple's success is 100% marketing, much of it is not. However, this fuss over how "new" the MacBook Air and Ultrabooks are is 100% pure marketing. It is there to get people excited about laptops again when the truth is, there has been no fundamental change at all. They are more portable and faster than the previous generation, a statement that has been true for the last 20 years.
    toddybottom
    • gawd

      @toddybottom
      do take a day off!
      there has been no fundamental change in cars in what? hundred years? 4 tires, steering wheel...
      100% marketing eh? you do like your statistics based on... well, whatever you feel like throwing out.
      a day off. it will be good for you.
      oneleft
      • Good, I'm glad you agree with me

        @oneleft
        Glad you agree that ultrabooks and the MacBook Air are not revolutionary game changers. They aren't changing the way we do things. They aren't a new market. They are the same old market where new laptops are faster and more portable than old laptops. I'm not saying that is a bad thing, only that this idea that ultrabooks and the MacBook Air represent some kind of a "new" market is 100% marketing. It is in an attempt to make people think they are buying some new and exciting type of computer. They aren't.

        "100% marketing eh? you do like your statistics based on... well, whatever you feel like throwing out."

        That's not based on statistics so I'm not sure where you got that one from. That is based on the fact that these laptops aren't any different from the previous generation of laptop than the previous generation of laptop was from its previous generation. Laptops get smaller and more powerful. This is normal. This isn't revolutionary.

        I'll contrast that with smartphones. When MS and Palm popularized the smartphone, it introduced a totally different way of interacting with your phone. People used smartphones in ways that they could never use their "dumb" phones before. Since then, they've gotten smaller, more powerful, with faster networking, but the idea is still exactly the same. MacBook Airs and ultrabooks did not usher in a new way of interacting with your laptop. They are exactly the same as old laptops with exactly the same old OS. They just happen to be a bit thinner and a bit more powerful. Both Intel and Apple are engaging in 100% marketing when they tell you that these are new categories of devices. They aren't.
        toddybottom
  • I'm a Macbook Pro user

    I'd never switch. The robustness of the case, the fairly slim profile of the laptop (despite omitting none of the horsepower), the touch screen-like trackpad, the backlit keyboard, the gorgeous display, and of course the gorgeous OSX UI.... that's won me good.

    Alienware is about the only laptop alternative I'd consider, as they similarly care about the build quality and experience, but they're far too massive for a road warrior.
    Mac_PC_FenceSitter
    • I'm a MacBook Pro user too :)

      @rbethell But I am also a Sony Vaio Z Series user. My Sony runs rings around my MBP thanks largely to its SSD. It's also considerably lighter than my MBP (3lbs vs. 6.6lbs). It also has a great (albeit smaller) screen and a backlit keyboard. It also has memory card reader, integrated HDMI output, boots in 19s and lasts for 7.5 hours on a single charge while running Win8. And it cost $800 less than my MBP.

      The MBP is pretty and sturdy but it's essentially now my desktop as it stays on my desk and rarely gets taken anywhere. 6.6lbs is a noticeable weight in comparison.

      My Sony, on the other hand, goes EVERYWHERE with me.

      Frankly, having used both, I wouldn't bother buying a MBP in the future - there are already (and sure to be even more very soon) far more compelling options on the market that support SSD, Thunderbolt, nice thin & light designs and a sensible array of IO ports.
      bitcrazed
  • RE: Can Wintel win the Ultrabook market?

    Yes it can if they price it right. No one in their right mind is going to pay $999 for an ultrabook except some bloggers. I haven't see the MacBook Airs around at all in the wild so people are not buying as many as you want us to believe. But for $599 someone will pick up an ultrabook because that is a $400 savings.
    Loverock Davidson-
    • If you haven't seen any macbook airs around....

      @Loverock Davidson- then you haven't spent much time in an airport or at a Starbucks. As far as laptops go, you'd see little <em>but</em> a Macbook Air at those venues.
      Mac_PC_FenceSitter
      • RE: Can Wintel win the Ultrabook market?

        @rbethell
        I can see the MBPS in Starbucks because the usual "Look at me, I'm so successful because I can buy a MBP and I have to show it off in Public to make me look trendy and important" inhabit there.
        Blogsworth
    • what rbethell said

      @Loverock Davidson-
      where is this "wild" you speak of? they're everywhere. not as many as macbook's but they're out there in force.
      who wants you to believe? someone making stuff up just to fool you?
      oneleft
    • RE: Can Wintel win the Ultrabook market?

      @Loverock Davidson- Yet I???ve see more MacBook Airs in the last six months, than I???ve see zunes, and those dreadful Windows mobile Phone 7.x phones in the last 3 years.
      Rick_Kl