updated 10:55 pm EDT, Mon August 15, 2011
Intel refuses call to cut ultrabook CPU prices
Intel is refusing calls from Windows PC builders to cut chip prices as steeply as they'd like to help them drop prices below Apple's MacBook Air, notebook industry contacts alleged late Monday. The companies had wanted to drop ultra-low voltage Core i5 and i7 prices by half to let them keep profit margins while competing on price. At best, Digitimes heard, the biggest PC designers were getting 20 percent discounts.
The current deals drop the 1.7GHz Core i5 in systems like the MacBook Air and ASUS UX21 to $250. The 1.7GHz Core i7 under the scheme costs $289 and the 1.8GHz top-end model costs $317.
Sources speculated that Intel's hesitance to drop the prices comes from the likelihood that it would lose its much-touted 60 percent gross profit margin, even after the initial rush and compensation from premium priced Xeon chips. A drop wasn't considered realistic no matter what the PC makers wanted.
Demands have been growing increasingly vocal and have led Intel to create a $300 million fund to help subsidize and market ultrabooks, but many of the companies haven't considered this enough. Despite stereotypes, it has been Apple and not its Windows rivals that has had the most cost-effective design in the category as it has been the only one known so far to get a solid-state drive based, full-speed ultraportable down to under $1,000. Most challengers are used to undercutting Apple by using slower or bulkier parts and can't do this with an ultrabook, where thicknesses below 0.8 inches and the need for low-voltage but fast processors dictates higher-quality materials.
ASUS will be the first outside of Apple to meet the ultrabook targets with the UX21 next month, but it should be matched towards the end of this year or early next with systems like the Acer Aspire 3951 and future designs from HP, Lenovo, and others.