Has Intel found the Ultrabook pricing sweet spot at $699?

Has Intel found the Ultrabook pricing sweet spot at $699?

Summary: Intel executives mentioned $699 as a price tag for upcoming Ultrabooks. Can that seal the deal against the MacBook Air?

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TOPICS: Intel, Hardware, Laptops
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Intel might have finally pinpointed a lower and sufficient price tag for its Ultrabooks that could lure customers away from the primary competitor in this market: Apple's MacBook Air.

During the second quarter earnings call with investors on Tuesday, CEO Paul Otellini said that "we are very confident that we'll see $699 systems at retail this fall."

When the Ultrabook concept was first introduced with the promise of more than 60 designs in the pipeline, the general average price was $999. That's a fairly good deal for the form factor and processing power offered within many of those designs.

However, let's face it. With the MacBook Air also starting at $999, the competition for Intel and its Ultrabook partner ecosystem was going to be incredibly fierce.

But at $699? Now you're putting a fully-fledged, powerful computing machine at an incredibly low price point and even in the same pricing realm as tablets. Otellini also specified that at least more than 40 of the approximately 140 Ivy Bridge-based Ultrabooks in the pipeline will be touch-enabled with another dozen released as convertibles. Thus, at least some of those could steal away tablet sales.

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Anyone wavering between a MacBook Air and an Ultrabook for just minimal reasons could easily be swayed over to the Ultrabook thanks to that very budget-friendly compromise.

A big roadblock still might just be the loyalty of Mac customers. Personally, I own a MacBook Pro, and the next time I buy a computer (likely within the next year), it would be an Air -- for a few different reasons. At $999, the 11-inch MacBook Air offers everything I need in a much tidier, smaller and very attractive package. Plus, I just happen to prefer the Mac OS X interface, and it syncs seamlessly with my iOS products.

But $999 is still a lot of money -- especially when you take into account that you could possibly get roughly the same product for $699. It almost seems silly to even to stop and think why you would spend the extra $300.

Yet it's a lot like how camera aficionados love their Leicas. They're beautiful products with high-quality results, and sometimes we're just willing to pay the extra money for a device that does the job well but is more aesthetically pleasing.

Nevertheless, certainly not all consumers care about specifically getting a Mac computer that badly. A severe difference in pricing could really do the trick for Intel and friends -- as could the Windows 8 release.

Additionally, a fall release for lower-priced Ultrabooks would put them in prime position to take over the rest of the back-to-school season and into holiday shopping. Intel executives tried to dissuade analyst and investor fears during the call yesterday, arguing based on a pattern they've seen over the last 20 years that second half of the year sales tend to leap ahead of the first half.

Cheaper Ultrabooks would certainly help.

Topics: Intel, Hardware, Laptops

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105 comments
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  • profit margins too high

    With the high profit margins and resulting cost to makers for the Intel chips, as well as for the MS software cost makes for no profit for makers at the target price.
    gertruded
    • $40 for an supported OS isn't bad.

      Don't confuse the retail price of an OS with what the White Box maker pays for it. Preinstalled Productivity software is the same. White Box makers charge what the market will bare, not what MS sells it for.
      Programmer1028
      • Editing...

        Market will "bare" should be "bear". Looks unprofessional.
        rstack@...
        • Mrs. McGuinness strikes again

          OK, I was gonna let it go, but in the second-to-last paragraph, the author used "dissuade" when she meant "assuage."
          Robert Hahn
      • the market would swindle its mother into slavery if it had to

        So it could profit... but keep repeating the meme of "what the market will bear", but then do not complain about a bad economy because workers are not buying...
        HypnoToad72
    • Vendors have always had to choose between ...

      ... high profit margins and high volumes at low profit margins. In the late 1980's, as personal computers were becoming commodities, Apple chose profit margins over volumes in exchange for a loyal, well-financed consumer base.

      Microsoft was well-established in the very-high-volume enterprise markets and chose to accept very low profit margins for those high-volumes. They left it to their OEMs to compete for consumers at even lower margins. Only since the iPad has been introduced has Microsoft had to compete for that consumer business.
      M Wagner
    • Don't forget

      Part of the price is not profit, but the cost of developing Windows. All Apple OS's have the same costs. So only the few dollars or profit on an OEM Windows license is the difference. It should be easy to undercut the Macbook Air with different hardware specs and even sell higher end hardware are higher prices. There is a lot of people running applications on Windows today that will pay more than $999 for application compatibility.
      rmark@...
  • Huh?

    "Personally, I own a MacBook Pro, and the next time I buy a computer (likely within the next year), it would be an Air -- for a few different reasons. "
    Yeah, the star used one on Sex and the City.
    kstap
  • It's Still an Intel Chip

    At the end of the day, does Intel really want Ultrabooks to just "steal" sales from the MacBook Air? It would make more sense for them to succeed on their own merit. After all, Apple uses the same Intel chips that the Ultrabooks use. A MacBook Air purchase results in an Intel sale just as much as an Ultrabook purchase.
    KPOM1
    • True, but Apple Could Switch to Arm...

      at some point, as OSX and iOS continue merging functionality. Intel is wise to not put all its eggs with Apple.
      zdnetreader123
      • Both Apple and Microsoft are putting pressure on Intel ...

        ... with regards to ARM but, the fact is that ARM cannot (currently) meet the needs of IT professionals who need to do serious computing without regard to portability. Apple would be stupid to cripple MacOS X with the expectation that the needs of their professional customers can be met with iOS.

        That is why Windows 8 offers "the best of all possible worlds" to the professional while Windows RT will meet the needs of consumers. This is a good strategy for Microsoft - if they can pull it off!
        M Wagner
      • Also, Intel sells chips to Apple much cheaper than to those many smaller ..

        .. manufacturers -- this was condition when Jobs chose Intel over AMD in 2005.
        DDERSSS
      • Irrelevant

        iOS and OSX "merging functions" has zero to do with ARM. iOS could be (and has been) made to run on x86, and OSX could be (and has been) made to run on ARM, since they are the same core OS.
        And as Windows still has over 80% of the market, how on earth is this Intel putting all its eggs in Apple's basket?!?
        .DeusExMachina.
    • Not Really

      While a single sale, either Mac or Wintel, will ultimately give the same dollars back to Intel, the concept is to advance the sales of Intel chips. 6% of the population of computers is Apple. The rest is Wintel. Putting a $699 product on the market for Windows people will fit their budget, and Apple people seemingly have no problems blowing their budgets when a new Apple product comes out.

      I have personal experience with just this phenomena, meaning I know plenty of people that could keep a lot of money in their pockets if they were hooked on Apple. I have 3 computers and a Transformer Prime. I don't miss not having a single Apple product.

      On the other hand, a close friend has to have Apple, and he's been hit with dead computers he can't fix (I can) nor can he afford to have them fixed. His Mac Book Air died 9 days after the warranty. He bought a new one after wrangling with Apple for a few months. That's what Apple wants and Apple people seemingly have no problems accommodating them.

      If my computer dies, I buy the parts and have it fixed the day I receive them.

      I don't know about you, but that's a major difference to me.
      RWNorman
      • It is a major difference, and your friends don't mind paying ...

        ... a hefty premium not to have to hassle with a broken computer. Even most Windows computer owners do not have your level of expertise (or patience) and that is why most users simply replace their computers when anything goes wrong!
        M Wagner
      • And on top of that...

        even if you can't fix your PC, you may find someone who can do it easier than a Mac, besides the cost of replacement will be way cheaper.
        FuzzyIce
      • Assuming personal anecdotes equals universal reality

        is how we get crap like global warming shoved down our throats.
        baggins_z
        • Um, no

          Science, reality, and the overwhelming preponderance of empirical evidence is why you get global warming shoved down your throat.
          .DeusExMachina.
      • Your point is nonsensical.

        If you can "fix" a PC, you can fix a Mac. If you can't, well, you can't. You claim you can and that your friend can't. There is. I difference regarding platform. Your entire argument falls apart for there.
        .DeusExMachina.
    • True but it would appear that Intel is interested in ...

      ... selling the ultrabook as a complete package so it doesn't have to share quite so much profit with its OEMs.
      M Wagner