Intel forced to slash ULV Core i3 prices to make Ultrabooks more appealing

Ultrabooks have already flooded the Indian market but their adoption rate hasn’t really taken off as Intel had hoped it would. This is true internationally as well and it’s not because they’re no good. It’s just that the cost doesn’t seem to justify the amount of PC you get. The argument has always been, if you are spending so much then you might as well buy a powerful notebook and if it’s portability you’re after then just get a tablet. The high prices can also be credited to the large profit margins that ODMs (Original Device Manufacturers) keep when designing a new Ultrabook for an OEM. However, Intel cannot possibly ask ODMs to reduce their margins further, since according to a recent report from IHS iSuppli, the gross margins for ODMs are down to below 7 percent. The only solution here is for Intel to slash prices on their CPUs and they may just do that. By cutting prices on their Core i3 ULV-based Ivy Bridge CPUs, OEMs can then afford to sell
Ultrabooks at a lower price while still maintaining the high quality finish we’ve come to expect from them.

The future of Ultrabooks look uncertain at this point

The other solution is for OEMs to ditch the fancy aluminium and carbon fiber chassis and go with plastics and other cheaper alloys. This would most certainly bring down prices, however, they run the risk of looking cheap and will most certainly be fragile, which could tarnish the premium image they set out to create in the first place.

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Intel originally recommended OEMs to only use high quality materials but having seeing the dismal sales of Ultrabooks, they are giving them a little leeway in order to make their product seem more attractive. Intel is not just worried about the poor sales of Ultrabooks but also of stiff competition from the red team. AMD is all set to unleash a new wave of ‘Ultrathin’ notebooks with Trinity onboard for powerful computing but for a lot less money than Ultrabooks. Cody Acree, an analyst with Williams Financial Group, belives that this price cut has a lot to do with AMD’s growth in this very segment. AMD may have joined the race late but already, they’ve managed to get a top tier OEM like Hewlett Packard (HP) onboard to showcase their new Trinity APUs. HP has already launched two Sleekbooks powered by AMD’s APUs at the $700 price point whereas Intel’s similar counterparts still hover around the $1000 mark. Due to the lack of serious competition, Intel has managed to drive its gross margins up to 65 percent. Looking back, Intel’s gross margins have generally hovered around the mid-50s, back when AMD had more competitive products, so this just shows the hold Intel has on the current CPU market.

Hybrid PCs will soon be all the rage once Windows 8 is out and with Microsoft’s Surface tablet PC in tow; Ultrabooks have a rocky road ahead.