Intel has been talking up its new Ultrabooks with their thin profile and performance for a while now. The main feature was that the notebooks were supposed to have a price of under $1,000. Some of the top-tier notebook makers have now said that that price will be hard to achieve with the processors from Intel racking up as much as a third of the cost of the notebooks.
The notebook makers asked Intel to discount the processors by 50% according to sources. Intel refused to discount the prices by that much and instead offered a 20% discount. With the 20% discount, the processors are still expensive with prices for the Core i7-2677 at US$317, Core i7-2637 at US$289 and Core i5-2557 at US$250.
Challenges in Achieving the $1,000 Price Point
Intel is apparently afraid to reduce the price because it would cut into its profit margins. Some of the netbook makers are saying they will not be able to sell Ultrabooks below $1,000 because the materials to build the machines cost $700 or more in some cases. This cost includes not just the processors but also other high-quality components such as SSDs, high-resolution displays, and premium build materials like aluminum and carbon fiber. These components are essential to meet the performance and aesthetic standards that consumers expect from Ultrabooks.
Moreover, the cost of research and development (R&D) for these advanced technologies is significant. Companies invest heavily in R&D to innovate and stay competitive, and these costs are often passed down to consumers. For instance, the development of energy-efficient processors and advanced cooling systems requires substantial investment, which adds to the overall cost of the Ultrabooks.
Market Dynamics and Consumer Expectations
The market dynamics also play a crucial role in pricing. Consumers have come to expect high performance and sleek designs from Ultrabooks, which puts additional pressure on manufacturers to deliver top-notch products. This expectation can sometimes lead to higher costs, as manufacturers strive to include the latest technologies and premium materials.
Another factor to consider is the competition from other segments of the market, such as tablets and traditional laptops. Tablets, for example, have become increasingly powerful and versatile, offering a viable alternative to Ultrabooks for many users. This competition can influence pricing strategies, as manufacturers need to position their products competitively to attract consumers.
Additionally, the global supply chain can impact costs. Fluctuations in the prices of raw materials, changes in trade policies, and disruptions in the supply chain can all contribute to the overall cost of manufacturing Ultrabooks. For example, a sudden increase in the price of aluminum or a shortage of SSDs can drive up production costs, making it even more challenging to meet the $1,000 price point.
Despite these challenges, Intel and its partners continue to innovate and explore ways to make Ultrabooks more affordable. This includes looking into alternative materials, optimizing manufacturing processes, and exploring new business models. For instance, some manufacturers are considering subscription-based models or bundling services with Ultrabooks to offer more value to consumers.
In conclusion, while achieving the $1,000 price point for Ultrabooks is challenging, it is not impossible. It requires a delicate balance of cost management, innovation, and strategic pricing. As technology continues to evolve and consumer preferences shift, the market for Ultrabooks will likely see further developments and adjustments.
via Digitimes
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