In-Depth

Will Windows 8 Bring Boom Times for Ultrabooks?

OEMs looking to take advantage of the Windows 8 wave are flooding the channel with new, touch-capable models -- but many face pricing challenges. With the PC market struggling, what are the chances for the Ultrabook's success?

• By Scott Bekker
• November 09, 2012

• Check out Part 1 and Part 2 of our Windows 8 Ultrabooks gallery.

Ultrabooks first arrived in late 2011. Everyone in IT knows what they are -- more or less. Not everyone knows someone who has one. The more bullish predictions for sales of the Intel Corp. category of thin, light, high-performance laptops haven't come to fruition, although most predictions of PC sales in any category over the last year have proven too optimistic. That said, if Ultrabooks are to have their time, that time starts now.

The category is almost tailor-made for Windows 8, which launched Oct. 26 and should power PC sales through the holiday season and into next year. That puts touch-capable Ultrabooks in potentially high demand. In the bigger picture, Ultrabooks probably fit right behind tablets and just ahead of touch-capable all-in-one desktops when it comes to volume for touch-based form factors. Meanwhile, the end of support for Windows XP on April 8, 2014, puts a lot of pressure on holdout organizations to upgrade at least to Windows 7 in 2013. All the non-touch Ultrabook models could get a bounce from that effort throughout the year.

The OEMs are looking at those factors and flooding the channel with new Ultrabooks. Launching a new underlying platform for Ultrabooks in June, Intel executives said they were tracking 140 total designs based on that family. According to Karen Regis, mobile marketing manager for Intel, about 70 of those designs were on the market by October. And the other half?

"I think we'll get the bulk of them out in time for the holiday selling season that really starts in late October," Regis says. Included in that deluge are nearly all of the 40 touch-enabled designs for Ultrabooks. (RCP highlighted seven touch designs in the October feature, "Windows 8 Ultrabooks Gallery: The First Wave," and there are five more highlighted in Part 2 here.) The new Ultrabooks fall into four broad subcategories, although Intel doesn't publicly break them out that way. There are touch-enabled clamshells, touch-enabled convertibles, non-touch clamshells and large-screen, non-touch, entertainment-focused clamshells.

The Rise of Touchscreens
Intel is publicly on board with Microsoft in betting that once users try touch on their PCs, they will want it. "For a lot of people, we think that touch plus Windows 8 is going to create enough of a 'wow' effect that we'll see a bigger-than-expected ramp of touch-enabled notebooks in general, as well as all the innovative all-in-one desktops that are coming," Regis says.

"We think that the expectation from end users is to have more natural interactions with their technology, and touch is a big one," she adds. "Through a whole slew of research that Intel's done in this space, people take to touch really, really quickly. You add the element of touch and, all of a sudden, it's fun."

There will be room for the existing non-touch Ultrabooks and the forthcoming non-touch Ultrabooks, too, Regis argues, and not just with organizations moving from Windows XP to Windows 7. "In our studies, there were still people who were more old-school and who preferred the keyboard and mouse only," she says. "Intel really believes that touch is going to go big, but it doesn't mean that non-touch will go away overnight."

Aside from user preference, there's another reason. "If you could get touch for free, it might be different," Regis explains. "But there's going to be initially a cost-adder in terms of getting that touch capability."

Price Points
Ah, cost. That's an issue that has dogged the Ultrabook category generally since it emerged.

Regis offers Intel's history of pricing for the Ultrabook category, and it goes like this:

At this time last year, there were four Ultrabooks on the market and not one of them started at below $999. It wasn't until Hewlett-Packard Co. hit the market with the Folio in December that a system was priced at $899. Intel projections that systems would start appearing at $699 were realized in the second half of 2012, and some well-configured systems are now selling for $599.

Looking forward to touch-Ultrabook pricing, Regis says, "It will be sub-$999 for sure, and it could be in the $799 kind of range. You're going to get touch for less than you could get non-touch a year ago." Indeed, the Lenovo ThinkPad Twist, a convertible multi-touch system announced on Oct. 9, is approaching that range with an announced price of $849. Still, other models, such as the IdeaPad Yoga 13 -- an Ultrabook version of the Yoga that is also from Lenovo -- is north of $1,000 at $1,099.

Some observers aren't sure the $799 price range is low enough to draw in the crowds. In an Oct. 1 research note provocatively titled, "Dude, You're Not Getting an Ultrabook: 2012 Forecast Is Slashed as Pricing and Marketing Disappoint," the El Segundo, Calif.-based market research firm IHS iSuppli argued for a lower price point.

"If Ultrabooks using the new Windows 8 operating system come close to the $600-$700 range next year, while adding in an attractive new consumer feature such as touchscreen, a good chance exists for strong sales in 2013," the note states. "If not -- and Ultrabooks stay at the $1,000 level -- their sales will continue to struggle in 2013, as they must compete against lower-priced options, such as tablets and smartphones."

IHS iSuppli has cut its sales projections for Ultrabooks for 2012 and 2013 combined from 83 million units to 54 million units. Even so, the firm is calling for a boom in sales in Q4 and more than 300 percent growth in sales from 2012 to 2013. What's more, IHS iSuppli sees big opportunities in Ultrabooks next year when Intel brings out a new technology platform that will reportedly support hand-gesture recognition, voice recognition, GPS, accelerometers and gyroscopes. Again, the firm says price point and marketing are key.

Uncertain Future
Critically, the below-expectations sales performance of Ultrabooks comes amid an overall dramatically underperforming PC market. As IDC analyst Jay Chou noted in an Oct. 10 market report, "PCs are going through a severe slump." The report noted that PC shipments for the third quarter had declined by 8.6 percent worldwide and 12.4 percent in the United States. Chou urged caution about Q4 expectations: "While Ultrabook prices have come down a little, there are still some significant challenges that will greet Windows 8 in the coming quarter."

Intel is doing its part to help OEMs meet the sweet spot on the price curve for Ultrabooks generally -- and touch Ultrabooks especially. "Intel went and worked with industry partners to ensure that we had adequate capacity of touch for the PC in [larger] screen sizes," says Regis, noting that while 10-inch-class touchscreens were in high-volume production for tablets already, Intel had to help prepare the supply chain for the larger touchscreens required for laptops. "We actually have put in place capacity for three to five times the industry projections for demand," she says.

Whether Ultrabook shipments start booming now or not, the variety of form factors and pricing options available for users to choose from for Windows 8 will be dramatically richer for the effort.

See Also:

• Windows 8 Ultrabooks Gallery: The First Wave
• Windows 8 Ultrabooks Gallery: Part 2