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PC makers demand more Intel cash to build $999 ultrabooks

updated 11:15 pm EDT, Thu August 11, 2011

PC builders doubt they can match 11in Air on price

Some Windows PC notebook builders are calling for steep discounts from Intel as they don't think the promise of a $300 million ultrabook fund is enough, sources explained late Thursday. Having been quoted over $700 in parts to make an 11-inch model to square off against the MacBook Air, they didn't think the $999 target price would be achievable without help. They told Digitimes that they needed Intel to both cut the prices on the processors themselves and offer a steep $100 marketing subsidy on every one of the ultraportables they sell.

A number of the companies who attended Intel's symposium on ultrabooks Thursday said they would hold off on committing to the category until they had talked more with Intel before the end of month.

The comments echo earlier complaints and create an ironic situation in which Windows computer builders don't believe they can compete with Apple on price. Intel's demand for very thin shells, long battery life, solid-state drives in some systems, and relatively fast low-voltage processors has put a strain on companies used to using cheaper components to lower the price at the expenses of thickness and performance. Acer, ASUS, HP, and Lenovo are believed to have committed to the idea and are helped by their large scale, but smaller companies might not have the financial strength to meet Intel's goals.

Apple's skill in controlling its supply chain may have also made competition difficult. Some competitors might have to use fiberglass instead of metal as Apple was one of the few forward-thinking enough to use aluminum early on and secure its supply before others.



By Electronista Staff
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  1. facebook_Ric

    Via Facebook

    Joined: Aug 2011

    +5

    Here's an idea...

    The government can subsidize some laptops, so we can all afford them. Think "Snow Crash"!
    /sarc

  1. Bobfozz

    Fresh-Faced Recruit

    Joined: Jul 2008

    +19

    spare cash?

    Apparently these PC builders who were undercutting Apple all these years never set ANYTHING aside for the proverbial rainy day and now want Intel to subsidize them! Who has subsidized Apple? Answer: No one.Supposedly last year there was supposed to be a PC shakeout, maybe it is starting now!

  1. SockRolid

    Forum Regular

    Joined: Jan 2010

    +18

    Intel's panic reaction

    Several reports said that Apple warned Intel that they would take their business elsewhere unless Intel's CPUs became much more efficient. Apple really wants better battery life in all their portable devices.

    So what does Intel do? They *pay* other laptop makers to use their existing chip. To copy MacBook Air. To replace Apple as a customer. I smell fear in the air.

    Better to spend $300 million improving your x86 design, Intel. Or maybe to work on your RISC competitor to ARM. Otherwise you're never going to catch up in the mobile space.

  1. Makosuke

    Forum Regular

    Joined: Aug 2001

    +20

    Wow.

    This is sort of incredible. Not only is Apple selling one of the most attractive, sleek, stylish computers on the market--basically mainstreaming a formerly boutique market niche--but now beige-box PC builders are complaining that a $300M handout to help them compete with said product ON PRICE isn't enough--they're going to need a $100 per unit subsidy.

    Which is explicitly saying that even when you take into account Apple's design-over-price emphasis and hefty profit margins, all those PC builders who have for years been "about to drive Apple out of business by copying their products and undercutting them on price and variety"--at least, according to tech pundits--are whining that they can't even TRY to compete on price without a 10% subsidy.

    It's like rain falling up, or Microsoft making a browser that doesn't hold the world back.

  1. mytdave

    Fresh-Faced Recruit

    Joined: Aug 2000

    +6

    translation

    "We never took Apple seriously, and we lack the vision and determination to create our own designs, therefore, Intel, in order to compete with Apple, we want you to reduce your profits and give us kick-backs for putting little 'Intel Inside' stickers on our second-rate products."

  1. mytdave

    Fresh-Faced Recruit

    Joined: Aug 2000

    +5

    irony

    On a more serious note, Intel should tell them all to 'suck it up.' It makes no sense for Intel to cut their margins to satisfy the rabid systems builders, because Intel is going to sell chips one way or another. Whether Apple builds millions of laptops or someone else does, Intel still sells chips.

    The irony of the situation is that if Intel cuts their margin to sell chips for less, Apple will also reap the benefit of lower chip prices, allowing Apple to potentially lower the selling price of the MacBook Airs, which does nothing to help the position of Apple's competitors, and only serves to make Intel less wealthy. Gotta love it.

    Maybe the systems builders should have invested in the processes necessary to build cost effective state-of-the-art machines like Apple did, instead of resting on their laurels (and loss leader cheap-a** netbooks). Maybe instead of skating to where the puck is, they should invest now in the processes necessary to leapfrog Apple. (Yea, that's unlikely.)

  1. iphonerulez

    Dedicated MacNNer

    Joined: Nov 2008

    +3

    Since when did Intel get into

    the business of subsidizing computer manufacturers. I'd think that computer manufacturers should be subsidizing Intel. Supposedly the Wintel platform should easily have the better price structuring since it sells to so many more consumers. If Windows has close to 90% desktop market share, there's a lot more consumers to spread the cost around. Anyway, it just seems as if it's the computer manufacturers' duty to build products at a cost that consumers can afford. I'm honestly left scratching my head when I hear this story of Intel giving money to PC notebook builders and then them demanding even more. I still can't figure out why. PC notebook builders aren't being forced to build MacBook Air-class notebooks. That's their choice. Did Apple ever go to Intel and demand a break on pricing structure because Apple had a much smaller market share? I'd never heard of any stories of Apple going to Intel and asking for such a thing. The thing is if Intel subsidizes Windows notebook manufacturers, then shouldn't it also be subsidizing Apple notebooks as well? It really seems like an unfair business practice to favor some manufacturers and not others.

  1. qazwart

    Fresh-Faced Recruit

    Joined: Apr 2001

    +4

    Irony...

    The other PC vendors can't make a 11" $999 sleek notebook PC. Yet, Apple, despite the alleged "Apple Tax", has no such problems.

    For years, I've told my PC friends that Apple's computers aren't overpriced. It's that Apple uses premium materials and refuses to build cheap loss leaders. Now, we're in an era where the same manufacturers can't touch the price of Apple products whether it's the iPad, the iPhone, and now the MacBook Air.

  1. byRyan

    Fresh-Faced Recruit

    Joined: Jun 2007

    +4

    apple

    Apple is making an ultrabook that uses an Intel processor. do they get a subsidy too?

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