Investors may have hoped that Intel's (NASDAQ:
) downward trend would soon come to an end, but a recent report
could be a sign that things are about to get worse. Research firm
) iSuppli has discovered that Ultrabooks -- the heavily hyped
portable computers that were designed to compete with Apple's
) MacBook Air -- are
not doing well at retail
. By the end of the year, roughly 10 million Ultrabooks are
expected to have shipped worldwide. That's right -- in an
more than 350 million
Windows-based PCs are shipped every year, only 10 million of them
will be wafer-thin models featuring Intel technology.
Intel was previously expected to ship as many as 22 million
Ultrabooks this year. In 2013, the company was expected to
deliver 61 million Ultrabooks, but iSuppli believes that number
has been reduced to just 44 million units.
What is the source of Intel's troubles? Craig Stice, a senior
principal analyst at IHS who specializes in computer platforms,
thinks he knows the answer.
"There once was a time when everyone knew the 'Dude, you're
getting a Dell' slogan," Stice said in the report. "Nowadays no
one can remember a tagline for a new PC product, including for
any single Ultrabook."
Stice said that the PC industry has "failed to create the kind
of buzz and excitement among consumers" that is needed to boost
sales and bring Ultrabooks a degree of mainstream success. "This
is especially a problem amid all the hype surrounding media
tablets and smartphones," he added. "When combined with other
factors, including prohibitively high pricing, this means that
Ultrabook sales will not meet expectations in 2012."
Intel has said that it aims to sell less expensive Ultrabooks
in the future. However, that may not be enough to persuade the
The sad truth behind cheap computers is that they are just
that -- cheap. Consumers learned this the hard way by purchasing
$400 and $500 dual-core Windows Vista machines a few years ago.
Most of them were too weak and/or had too little RAM to handle
the cumbersome OS. For a few hundred dollars more, frugal
shoppers could have acquired a much better device with a Core 2
Duo processor and three gigabytes of RAM, which was enough to
make Vista run at a reasonable pace.
This issue was not exclusive to Vista, however. Consumers
found the same problem when buying cheap Windows 7 machines as
well. That is one of the problems with allowing anyone and
everyone to build Windows hardware. It is also why Microsoft
) decided to build its own tablet -- to ensure that Windows 8 was
featured on at least one polished device.
Intel cannot win over consumers with the price alone. If
Ultrabooks are too expensive, shoppers will turn to the market
leader of thin laptops -- Apple. At $1,200, the 13-inch MacBook
Air is by far the best product in its class. If an Ultrabook is
too cheap, consumers may worry about its quality and
That is a valid concern of course, as most Ultrabooks do not
live up to the hype. While there have been a few that scored high
marks from reviewers,
many do not
There is another problem as well, one that few analysts seem
to catch. Ultrabooks do not feature the same bells and whistles
that accompany traditional laptops in the same price range, such
as ultra-powerful processors, DVD or Blu-ray drives and massive
hard disc drives. While many argue that DVD drives are becoming
obsolete and that HDDs are cheap and break easily, some consumers
still like them.
Thus, Joe Consumer may not care if an Ultrabook's 128GB solid
state drive is sturdier and more reliable than a 500GB HDD. He
may only care about the fact that the larger hard drive can store
These are issues that Intel may never be able to overcome. If
it fails to do so, then the Ultrabook initiative -- which may
cost the company
as much as $300 million
-- could ultimately fail.
(c) 2012 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.