Could Intel enable USD200 Ultrabook?

According to IHS, Zane Ball, vice president and general manager of global ecosystem development, is set to present his company’s plan to empower the PC industry to produce low-cost notebooks with touchscreens Monday (May 20) at an IHS event in Vancouver, Canada.  

To date, Intel’s initiative to re-invigorate the PC industry by pushing Ultrabooks and other models of ultrathin notebooks has not achieved wide scale success. Meanwhile, PC sales continue to contract as consumers increasingly opt for tablets, which generally cost less and provide more mobility and convenience.

According to Craig Stice, senior principal analyst for compute platforms at IHS, a $200 ultrathin notebook seems a little far fetched at first glance, considering that many Ultrabooks and ultrathins currently on the market go for $1,000 or more. But Stice believes Intel has a shot at making it work.

"The small laptops known as netbooks saw their prices reach down into the $200 range at the height of their popularity a few years ago, and a cost analysis of netbooks shows how such a low level of pricing can be used to support a no-frills type of ultrathin PC," Stice said, in a statement.

"Hitting this kind of price point is not impossible for the PC industry, already a cutthroat market accustomed to razor-thin margins," Stice said.

Stice noted that Paul Otellini, Intel’s out-going CEO, predicted during a recent earnings call that touch-enabled, ultrathin Intel-based notebooks using non-core processors could be available by the end of this year.

Not everyone agrees with IHS’s vision. "Yes, a $200 PC would spur demand, but it misses the point," said Jim McGregor,  founder and principal analyst at Tirias Research. "Computing is changing. People are moving away from the traditional PC platforms just as they did from the desktop to the notebook."

In a recent blog posting on EE Times, McGregor maintained that wearable computers would be a driving force for computing in the future. He believes the definition for what is widely considered computing is changing.

"While the PC is still a viable market, it is not the technology driver or a high-growth market, nor will it ever be again," McGregor said. " I would argue that Intel needs to push for a $200 PC just to maintain sales of the existing form factors."

A key question is whether Intel is willing to sacrifice its margins to make chips available to PC OEMs at a low enough cost that this could become a reality. But with the PC business—Intel’s lifeblood—on life support, the No. 1 chip vendor may have to make some bold choices.

All hail Bay Trail
According to IHS, Intel can control up to 33 percent of the total bill-of-materials cost for the PC through the central processing unit (CPU) and motherboard. If Intel decides to provide a price break for just these components, PC original equipment manufacturers could see their margins improve, allowing them to drive down prices for the retail market. With PC competition so fierce, it takes only one PC manufacturer to find a price point that sells—and others are bound to follow suit shortly afterward, IHS said.

Intel could also be instrumental in introducing an even more powerful ultrathin-type mobile PC than netbooks, IHS said. Intel’s next-generation Atom processor, codenamed Bay Trail, has the potential to deliver a performance boost that will clearly separate the traditional netbooks of old from the new generation of mobile and ultrathin PCs, according to IHS.

Netbooks—which after a short run as a popular type of computer are now all but extinct—had limited computing power and were regarded more as devices for content consumption. But, according to IHS, the new and more economical ultathins being considered would offer considerably more power and be categorized as content-creation devices. Such a perceptible enhancement could increase their chances of survival in the marketplace, unlike the netbooks, IHS said.

A key factor in whether or not this will happen is Bay Trail, which Intel says will move from two processing cores to four to provide beefed-up performance, IHS said. Along with Bay Trail, Intel’s own high-definition embedded graphics and an extended battery life for improved power will yield a processor bearing similar performance to the chipmaker’s family of Core processors, IHS said. All these traits could be part of the new, less expensive ultrathin being projected.

For the PC industry, such an ultrathin notebook retailing for $200—if Bay Trail delivers what Intel claims it will—would be a much needed shot in the arm, according to IHS. It could spark the mobile PC and stop it from losing more ground to tablets, according to the firm.

In addition to Intel being willing to sacrifice its own margins in order to make this all happen, PC makers must also be willing to sacrifice even more of their own margins in exchange for the greater amount of volume that they seek, IHS said.