Ultrabooks are only 5 percent of laptop sales. High prices still to blame?

Ultrabooks are only 5 percent of laptop sales. High prices still to blame?

Summary: With many Ultrabooks continuing to hover near the $1,000 price point, the PC industry shouldn't expect big sales until prices are slashed.

TOPICS: Laptops, Intel, Mobility
At $1,399.99, the upcoming HP Spectre XT TouchSmart continues the trend of pricey Ultrabooks.

The future of laptops, as Intel has intended with its Ultrabook platform, is reaching consumers a little slower than the PC industry may have expected. According to market research from Barclays, Ultrabooks only accounted for around 5 percent of laptop sales in the second quarter of 2012.

That's about half the sales percentage that PC manufacturers expected, which has market analysts trying to determine the reasons for the slower-than-anticipated sales. No doubt the success of tablets and the anticipation for Windows 8 have played a part, but pricing still appears to be culprit number one.

Sterne Agee analyst Vijay Rakesh told AllThingsD that 75 percent of Ultrabooks being sold at Best Buy cost $950 or more. Despite the hype over new hybrid tablet/Ultrabook models running Windows 8 announced at IFA 2012 last week, there was precious little information provided about their pricing. Given their advanced functionality, these devices will probably continue to toe the $1,000 price line, if not leap right over it.

There are some Ultrabooks that are priced closer to $700, but considering how many people don't want to spend more than $500 for a new laptop, there is still plenty of room to cut costs. Intel is working hard to help manufacturers slice component costs -- such as devising cheaper, yet still rigid plastic chassis to replace pricier metal chassis -- and they already use hybrid SSD/hard drive storage in lieu of pure SSD solutions to shave costs off lower-priced Ultrabooks.

But there's one component Intel doesn't seem as interested in seeing come in with a lower price: its own processors used to power Ultrabooks. Businessweek says the Intel processor accounts for around 25 percent of the total cost of an Ultrabook, and there's no indication that the company is willing to cut that cost for its manufacturing partners.

As more Ultrabooks hit the market, part production will ramp up, prices will eventually fall, and sales will increase. Unfortunately for the PC industry, that process hasn't happened soon enough. Do you still think Ultrabooks are priced too high? How low must prices go for you to consider purchasing one? Let us know in the Talkback section below.

Topics: Laptops, Intel, Mobility

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  • Must be the OS that is installed on them. If they had OS X installed ..

    Ultrabooks would sell like hotcakes on a cool Autumn morning. (Sorry, couldn't resist. Grin.)

    But really, the hardware factor is only a third of the reason explaining the lack luster sales so far. The second IS how the installed OS enhances the hardware in performing useful tasks. And, the third factor is the initial purchase cost.
    • Stop talking BS - 700 Million Windows 7

      First of all, if OS X was such an enticing value, why is OS X still less than 2% of the world wide operating system market share? Another thing you need to look into, the majority of MacBook Airs and MacBook Pro's I see running Windows 7 still prove that a lot of persons still don't like OS X even though they like the hardware. Look at the review sites of the new MacBook Pro Retina Display, whether it be Engadget, Anandtech, one of the first thing the reviewers do or one of the first requests in the comments is, how does it run Windows 7 or 8?

      A lot of Mac users I notice describe the Mac OS as lacking customization, gimmicky and weak. Great hardware, crappy OS. That's the concensus, you seem to be the minority. Ultra Books will remain expensive because persons have passed this idea that they need expensive computers. What consumers are doing on a PC these days does not necessarily require it to look like a MacBook Air, as long as it can launch Microsoft Word, access Facebook, email, comes with a decent processor, amount of RAM, decent screen and doesn't look too bad under $600, then its a buy.

      A lot of these OEM's like HP are just trying to capitalize on a momentum, but I bet by Holidays 2012 or early next year, you will see these same UltraBooks going on sale for $399 and I say serve them right.
      • Every time I hear someone call

        UNIX a crappy OS, I know I can stop reading.
        • concensus

          Technically he said that it was the general consensus, a view. Not that the underlying fundamentals of the OS is rotten to the core (Its really not).

          And to be honest i have found there is quite a lot of people who LOVE the hardware (especially appearance) of Mac products but would prefer Windows.

          Thats not saying everyone has to have that opinion, or that its fact (Its just opinion) but it does seem to be a popular broad opinion.
          • No, what he actually did

            was try to make his personal opinion seem more important by making up a fictional consensus and claiming he was just reflecting it.
        • Mac OS isn't synonymous with UNIX

          Ugh, I get tired of Mac users trying to flop back on UNIX. Yes, Mac OS uses UNIX, and it's a KERNEL! (key word here) It's absolutely possible for Mac OS X to suck when you consider the many layers of code on the great UNIX kernel.

          So please, Mac users, quit trying to imply criticizers are ignorant since they're "saying UNIX sucks". No, no they're not. If anything you're illiterate with basic computing.
          Kalan Petty
      • Have you read the reviews?

        The main reason for installing Windows was to enable the reviewer to run hardware benchmarks, including games, as there aren't that many cross platform benchmark packages out there.

        Seriously, you never picked up on this?
    • Might as well buy a Mac then..

      I think you are understating Windows, the people you would see purchasing a computer in an outlet store are most likely there to purchase a Windows machine. If they wanted Mac OS X they might as well just buy a Mac (Good hardware, and now some quite achievable options for cheap).

      Dont forget, Mac OS X is still the minority the numbers would disagree with you that everyone wants OS X. (Not saying there are not other factors, but its not to be dismissed.)
      • Slices of Market

        Well, Apple does a lot better when the comparison is made to computers in the price range and markets where it competes.

        And there's the real point about the Ultrabooks. They were meant to reverse the race to the bottom on pricing in Wintel land so as to improve profitability to the makers. I don't know that 5% of current sales is doing the trick. Intel jump started the sector with 300 million (over 3-4 years) and I'm not sure they've seen growth enough where that is getting paid off. Then again, if it's 5% of the world and Apple has 2%, I gather around the third week of October we'll be hearing that Ultrabook makers earned a lot more money year over year.

        At this point, though, we don't know if there will be growth in the pc market this quarter or next quarter, when Win8 is officially out. We will have to do some analytical work to figure out the Ultrabook effect on generating sales/profit growth or if the Ultrabook mitigated downward pressures on manufacturers.

        You chose your metric so that you could quote the lowest percentage of Apple share you could. Apple's computer business is nicely profitable with handsome margins and sales growth. Some mention of people buying Apples only to install Windows is presented without statistics. I've not seen it myself and the people around me tend to get Macs. But it's not as though the money Apple got for the purchase is tainted if the user wants to run Windows. And, when it happens, Microsoft gets more revenue per Mac, so you'd think they'd encourage this more. Meanwhile, because Apple is the only one who sells the OS X platform and lots of people sell the Windows platform, Apple's exclusivity does help them strategically, and their margins allow them to develop interesting designs and products, like the MBP Retina. Too pricy for me, but if I was a video pro...

        Why is it every time someone points out that Apple is doing well, Windows partisans have to trot out their "Duh, winning!" tropes? Microsoft makes operating systems and at this time does not have a competitor in the pc space. Microsoft better be winning under that circumstance. Apple makes computers and its competitors are Dell, HP, Lenovo, Asus, Acer, etc., etc., etc.
      • Is Intel just too greedy?

        The price point is just too high, mostly due to Intel's pricing.
  • Well price is definately the reason..

    But top level tech always costs loads, that's nothing new. These devices are meant to be cutting edge and actually the prices seem fairly solid. The cost is basically the processor and the ssd's.... That's Actually what makes them "ultrabooks" if you cut components to cut price then they are "laptops". I wish the new gear could be as cheap as the budget gear just like everyone else, but r&d has to be paid for.

    Personally I can't take the risks of carrying very expensive laptops. For example my MBA; I take it everywhere and it's one of my favourite bits of kit I've ever owned, but then I'm lucky enough to have gotten it through a work scheme that halved the price; as much as I love it, I couldn't justify that spend of my own cash. For me £1000 is desktop money and I can configure those, mod and keep running, laptops just don't live long enough for me to spend that kind of money.

    I also think that performance may be a factor. Whilst Home media creation and editing are undeniably on the increase, the vast majority of users use their laptops for office, facebook, youtube, broswing, watching dvds, playing java games and streaming media.... And little else. The fact is most all budget laptops can do these things without a hitch - parts performance is massively out-stripping what the average user does with the device.

    I think assuming W8 knowledge is massively reducing sales supposes a level of tech awareness I don't experience with my none techy friends.
  • Cost is one factor

    lack of driver for Linux is another!
    If you buy one of these devices you are stuck with Win! so why buy these? an air supports all three Oses that would be my first choice as a professional user and dev!
    • heheheh

      good joke
    • I see what you did there

      Considering Linux still has barely over 1% marketshare...you know what? It's not even worth finishing that thought. Go away, Linux troll.
      • actually

        I really like linux. but to say that ultrabooks are not selling well because of linux users is simply unrealistic. just cause linux is awesome isn't an excuse to live in lala land.
      • the point is you are spending so much money

        on something that is so restricting so why bother with them?!
        there is two products 1-supports only one platform 2-supports all platforms and prices are almost close even air is less expensive so if you have a brain you know which one ti choose!
        • that argument is perfectly valid for those of us who enjoy the ability

          to dual boot, but the math doesn't add up. if, and that's a big if, every linux user who wants a laptop decided to go out and buy an ultrabook, that 5% would jump to 6%. that really doesn't change the situation at all. this article is about business, not about linux devs.
          • yeah i get your point but

            i didn't say that was the only factor! first it was high price second is being turn off for professionals and devs which at least may want to try linux someday and here it goes third, fourth, fifth ....
          • it will turn off linux people which is a shame

            hopefully driver support will come quickly. I'm worried about the same for all those windows 8 hybrid devices coming out this and next year. A number of distros are working towards being touch friendly and it would be pretty cool I think to have a hybrid linux device.

            realistically though, I imagine it's issue #10 or lower on the list.
          • You are calculating it wrong

            You are implying that it will be a turn off only for 1-2 % of linux people but you are not considering those 90% of windows people may also don't like to be restricted for no apparent reason?!
            but yeah i do agree with you definitely not in a second place of problems i didn't mean to rank it this way just wanted to say what was the biggest turn off for me and maybe a lot other people like me out there!

            about hybrids did you see the winRT hand-on? just meh, we shall wait and see