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Friday, December 14, 2012

New Hope Emerges for Windows-based Ultrabooks

Ultrabook computers were supposed to be the Next Big Thing for Windows-based PC vendors -- at least that was the idea when it was first presented to Paul Otellini, CEO of Intel. Apparently, Steve Ballmer, CEO of Microsoft, was as enthusiastic as Otellini that this would be a plausible solution to the decline in profit margins.

However, low ultrabook sales in the first half of 2012 clearly undermined the prior bullish claims that 40 percent of all notebook shipments would be these new high-priced devices.

PC vendor enthusiasm quickly turned to disappointment as retailer orders for ultrabooks were either cut-back or cancelled -- once the reality of the miscalculation was fully acknowledged.

According to the latest market study by ABI Research, higher than expected device prices, the prolonged wait for Windows 8, combined with a sluggish global economy have hindered sales for the new thin and light portable computers.

Nevertheless, after the launch of Windows 8 and the release of a host of new ultrabook models from various vendors, ABI now says that it is seeing shipments rise to twenty-one million by the end of 2012. Therefore, perhaps this increase in retailer inventory will find some new ultrabook buyers during the holiday season.

Ultrabooks -- a term coined by Intel for ultra-portable computers based on its processor architecture -- are part of the broader portable computing market typically associated with the terms laptop or notebook PC.

Originally targeted at mid-range prices, the most popular ultra-portable today is Apple's MacBook Air. That device, by all accounts, has been a very successful product category for Apple. In fact, the company was ranked first in ABI's latest ultrabook Competitive Assessment study.

"One of the biggest factors hindering ultrabook PC sales has been the awaited launch of Windows 8," says Josh Flood, senior analyst at ABI Research. "However, with the launch of Windows 8, we may see a double whammy effect."

It's believed there's a group of consumers that have postponed a computer purchase -- so they could buy an ultrabook with Windows 8. Furthermore, with recent new ultrabook model releases, older system prices will reduce and this should entice some people to consider these devices.

North America is currently the largest market for ultrabooks with half the world's shipments. Western Europe and Asia-Pacific follow behind respectively.

Interestingly, the majority of ultrabook purchases to date are for personal use, unsurprisingly with the lion's share of advertising and marketing by vendor OEMs focused on style and convenience.

Intel's latest claim is that ultrabooks are really a much better value proposition for business use. Therefore, ABI Research now projects a more equal split between consumer and business purchases of 60/40 percent by 2017.

Intel hasn't disclosed the marketing budget for the ultrabook campaign, but they said it has been their biggest launch-related advertising investment since 2003.

We'll have to wait and see if the new hope for increased demand actually translates into product adoption. If retailers offer heavy discounts to unload their inventory during the holiday season, then some improvement in the situation does seem possible.