Back in April of 2012, a key trend had emerged -- people were choosing lower-cost notebook PCs. The Wintel partnership was concerned. If the trend gained momentum, then profits would surely be impacted. Intel responded with the Ultrabook campaign, in an attempt to "correct" the market.
The result of this huge marketing investment by Intel was "cinematic and epic" -- but clearly not in a way that was intended. The outcome from the campaign and the apparent lessons-learned are truly one of the most insightful marketing case studies of the decade.
Why? This was an irrefutable example of how traditional mass-media marketing was no longer able to significantly influence buyer sentiment. Moreover, the size of an advertising and promotion budget won't translate into market development gains, if and when it rejects a compelling trend in the marketplace.
The Reality: a New Era of Computing
The Average Selling Price (ASP) of Ultrabooks and media tablets declined by 7.8 percent in 2014, as the market matured (reaching commodity status), thereby allowing these devices to become more affordable in all markets.
According to the latest worldwide market study by ABI Research, the average weeks of household income needed to buy a tablet or Ultrabook both declined by approximately 30 percent year-over-year -- making them attainable to a much wider range of consumers around the globe.
"Across 22 different countries between 2013 and 2014, there was an 8.5 percent decline for the ASP of tablets and 7.1 percent for Ultrabooks," said Stephanie Van Vactor, research analyst at ABI Research. "This decline is allowing these devices to reach a larger audience in a wider range of countries."
The much welcomed affordability of new personal technology devices is strongest in many mature markets -- such as the United States, Japan, and Germany -- primarily due to the higher household income.
However, ABI highlights that Chile experienced the largest decline in ASP -- 56 percent for both tablets and Ultrabooks combined. Tablets experienced the largest decline at 70.3 percent, due to the increase in selection and competition caused by lower-end devices entering the market between 2013 and 2014.
As shown in Chart 1, the most noticeable change in affordability for weeks to buy for Ultrabooks and tablets occurred in Indonesia. In 2013, ABI data shows that 11 weeks of income were needed to purchase an Ultrabook and nearly four weeks for tablets.
In 2014, the weeks of income needed to purchase an Ultrabook declined by 47 percent, dropping to 5.9 weeks, and for tablets weeks of income declined by 60 percent, dropping to 1.5 weeks.
"Partly due to the increase in models and price points in e-commerce, Indonesia, like many other developing markets, is a good example of the commoditizing of these devices," explains Van Vactor.
Market maturation will continue this effect through 2015, especially as competition (i.e. Chromebooks and Linux) increases and device affordability continues to prosper as a result. Over the next year, ABI predicts that competition will again surge and ASPs will continue to decline -- this is the market reality; granted, it's an inconvenient truth for the Wintel partnership.
Besides, a much greater shift toward lower-cost computing power and the ongoing accelerated adoption of open-source software is about to unfold in the second phase of this transformation. The next-generation data center -- known as the hyperscale or web-scale phenomenon -- will have an equally dramatic impact on the Global Networked Economy. Stay tuned...
The result of this huge marketing investment by Intel was "cinematic and epic" -- but clearly not in a way that was intended. The outcome from the campaign and the apparent lessons-learned are truly one of the most insightful marketing case studies of the decade.
Why? This was an irrefutable example of how traditional mass-media marketing was no longer able to significantly influence buyer sentiment. Moreover, the size of an advertising and promotion budget won't translate into market development gains, if and when it rejects a compelling trend in the marketplace.
The Reality: a New Era of Computing
The Average Selling Price (ASP) of Ultrabooks and media tablets declined by 7.8 percent in 2014, as the market matured (reaching commodity status), thereby allowing these devices to become more affordable in all markets.
According to the latest worldwide market study by ABI Research, the average weeks of household income needed to buy a tablet or Ultrabook both declined by approximately 30 percent year-over-year -- making them attainable to a much wider range of consumers around the globe.
"Across 22 different countries between 2013 and 2014, there was an 8.5 percent decline for the ASP of tablets and 7.1 percent for Ultrabooks," said Stephanie Van Vactor, research analyst at ABI Research. "This decline is allowing these devices to reach a larger audience in a wider range of countries."
The much welcomed affordability of new personal technology devices is strongest in many mature markets -- such as the United States, Japan, and Germany -- primarily due to the higher household income.
However, ABI highlights that Chile experienced the largest decline in ASP -- 56 percent for both tablets and Ultrabooks combined. Tablets experienced the largest decline at 70.3 percent, due to the increase in selection and competition caused by lower-end devices entering the market between 2013 and 2014.
As shown in Chart 1, the most noticeable change in affordability for weeks to buy for Ultrabooks and tablets occurred in Indonesia. In 2013, ABI data shows that 11 weeks of income were needed to purchase an Ultrabook and nearly four weeks for tablets.
In 2014, the weeks of income needed to purchase an Ultrabook declined by 47 percent, dropping to 5.9 weeks, and for tablets weeks of income declined by 60 percent, dropping to 1.5 weeks.
"Partly due to the increase in models and price points in e-commerce, Indonesia, like many other developing markets, is a good example of the commoditizing of these devices," explains Van Vactor.
Market maturation will continue this effect through 2015, especially as competition (i.e. Chromebooks and Linux) increases and device affordability continues to prosper as a result. Over the next year, ABI predicts that competition will again surge and ASPs will continue to decline -- this is the market reality; granted, it's an inconvenient truth for the Wintel partnership.
Besides, a much greater shift toward lower-cost computing power and the ongoing accelerated adoption of open-source software is about to unfold in the second phase of this transformation. The next-generation data center -- known as the hyperscale or web-scale phenomenon -- will have an equally dramatic impact on the Global Networked Economy. Stay tuned...