WHAT DO MOST children want this Christmas? If you are thinking a Lego set or an Angry Birds stuffed toy, sorry, that is not it. What they really want is an iPad, says a Nielsen survey. Apple Inc’s touchscreen tablet is the musthave toy for 44% of children aged six to 12 years old in the US.
It’s also the must-have toy for many grown-ups this holiday season. And while that is great news for Apple and the original equipment manufacturers along its supply chain, it is glum news for at least two product segments of the PC market. The first is notebooks, where demand has been crimped not just by media tablets but also by folks tightening their belts during the gift-buying season.
The second is netbooks. These low-priced mini versions of notebooks took off during the downturn of 2008/09 but have since been eclipsed by tablets, which have shaken up the world of mobile computing with their high entertainment value. Netbooks have fallen so out of favour that demand could shrink by 40 million units next year, warns Taiwan’s Market Intelligence Center, a government- funded think tank.
That has spurred PC makers to reinvent their mobile computing devices. And the upshot of that is the ultrabook. Backed heavily by Intel, whose chips have been shut out of the tablet market, the ultrabook is a notebook that has gone through a crash diet. It is thinner and lighter than ever, yet can do what a full fledged computer does, not just play videos or give quick web access.
To meet Intel’s ultrabook trademark, the current generation of these devices has to weigh less than 1.4kg and be thinner than 20mm. They should also have a battery life of more than five hours while the reload time from sleep mode should be super fast, just seconds. Lastly, they should be priced below US$1,000 ($1,296).
Of course, there has long been an ultrabook in the market — the Mac- Book Air. In fact, the new ultrabooks that have just come out in Taiwan, such as Asustek Computer’s Zenbook and Acer Inc’s Aspire S3, look and feel remarkably like the sleek and elegant MacBook Air. Fitted with solid state drives, they power up quickly and have a resume time from hibernation of a few seconds, making them more like iPads.
Lighter and faster is definitely the way forward in the evolution of the notebook, and Intel bravely predicts that ultrabooks will make up 40% of worldwide notebook demand by the end of next year. However, many in the industry, and even first movers in this new space such as Taiwanese PC maker Asustek, recognise that Intel’s goal is ambitious.
COSTLY INSIDE
One big reason is pricing. Grabbing a two-fifth share means appealing to the mid-range segment of the notebook market. Right now, ultrabooks aren’t a bargain. Ranging from US$799 to US$1,299, they are being sold at a premium to notebooks, whose average price is US$700. The price needs to drop below the regular-notebook average before it will really catch on, reckons KGI Securities.
That may be difficult for now as ultrabooks are being made close to cost. DigiTimes, an IT trade journal in Taiwan, estimates that the standard ultrabook has a materials costs of US$690, OEM costs of US$100, and marketing and distribution costs of US$150. That comes up to US$940
per ultrabook.
The cost pressure comes from specialised components, such as the solid state drives that make ultrabooks slim and speedy. Solid state drives have much faster transmission than the hard disk drives that are conventionally used in notebooks. They are also about 20 times more expensive to make. Moreover, as it is still early days, the ultrabook supply chain has limited capacity and new investments have to be made to reach the scale Intel is talking about.
WILL THEY BECOME MAINSTREAM?
As it is, most enterprises and individuals are prolonging the PC replacement cycle in anticipation of next year’s offerings. The iPad3 is due to come out, as is the latest Windows 8 operating software as well as a new Intel chip for ultrabooks, which is designed to deliver much better performance. As market research firm IHS iSuppli sees it, ultrabooks will make up 13% of notebook demand next year, a much more realistic scenario than Intel’s prediction.
However, in five years, the ultrabook will become the mainstream model for tablet PCs and notebooks, says Acer chairman J T Wang. The line between notebooks and ultrabooks will become less distinct as more and more ultrabooks enter the market, he adds. Intel itself is giving the ultrabook initiative an added push through its US$300 million Intel Capital Ultrabook Fund, which will invest in companies working towards technical improvements in the ultrabook’s hardware and software.
Ultimately, how successful ultrabooks will be depends on whether they become the sort of mobile computing gadgets that people want. That means, among other things, improving battery life and performance, and making them more affordable. Otherwise, consumers will opt for clunkier notebooks with all the trimmings, but at a fraction of the cost. Or, they will just keep on wishing for an iPad under their Christmas tree.
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