Intel's ultrabook strategy needs heavy dose of emerging markets

Emerging markets are nearing the eight-week PC affordability mark, says Intel. And that threshold may mean a lot of ultrabook units.

Intel's master plan to keep PC unit growth rolling along revolves around emerging markets and the ultrabook.

Stacy Smith, CFO of Intel, detailed the importance of emerging markets at a Morgan Stanley investor conference on Monday.

His money slide revolved around an analysis of 15 to 20 markets and the correlation with PC demand and affordability. In a nutshell, when the affordability of a PC gets down to eight weeks demand takes off. PC penetration rates soar once a consumer knows a computer can be paid off in two months.

Smith said:

If you think about China, Latin America, Eastern Europe, you have two to three billion people who can now afford computers. We haven't seen a phenomenon like this since the last '90s where the large mature markets went through the same transition. This has been driving our volume. This will continue to be the driver of the volume for the industry. Just to put this in perspective, last year the emerging markets grow 16%. It's 50% of our units now and that was against a backdrop last year of relatively weak mature market economies and so even against that backdrop we saw very robust growth last year in the emerging markets. That’s a really important driver of our industry.

And if you connect the dots, Intel clearly believes that ultrabooks will be an emerging market play. Ultrabooks will double as both laptops and tablets. Smith talked up Windows 8 and Intel's upcoming processors. He said:

When you couple that Ivy Bridge processer with Windows 8 I think you're going to have this amazing user experience. That’s where you start to turn on things like touchscreen capability and some of these other capabilities. I got to play the other day -- one of the nice things about my job is I get to play with prototype technology -- with a prototype Ultrabook convertible. This is a device that's -- it's a computer that you can swivel it around, it's a really nice tablet in a very thin and light form factor. It was running an early version of Windows 8 with a touchscreen. I've got to say it was a really compelling experience.

Some of these prototypes will land in mature markets, but the growth will come from emerging markets if Intel's data plays out.

Also see: CNET Dell XPS ultrabook review