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Intel gives $100 ultrabook subsidy, delays Atom due to iPad

updated 10:35 pm EST, Tue November 29, 2011

Intel ultrabook subsidy, Atom delay may be exposed

Intel is giving Windows-based ultrabook makers a $100 discount to help them try to undercut Apple on price, part suppliers in Taiwan claimed late Tuesday. Designers were getting the "marketing subsidy" in a move that Digitimes understood would lead to prices dropping five to ten percent below the $1,000 mark. The drop would follow an earlier cut expected before the end of 2011 and would presumably come from Intel's $300 million ultrabook fund.

The explanation for the supposed price problem also came with a rare cost breakdown. A typical 13-inch, 128GB SSD ultrabook maker's raw parts cost $690, including as much as a $200 Intel processor, a $150 SSD, and a $50 LCD, among other factors. After rolling in "OEM costs," marketing, and shipping, the system often ended up being $940, leaving very little profit margin, the insiders asserted.

Lopping off the marketing costs would bring that same system to $840 before the profit margin and make $1,000 or less relatively simple. Apple, without that benefit, has sold its own 13-inch MacBook Air at $1,199, albeit often with a faster processor. Companies like Acer and ASUS aren't used to having to use higher-end parts such as aluminum and SSDs as often as Apple and have repeatedly expressed discomfort at being so close in pricing as Apple.

Apple was also creating problems in the netbook arena, a follow-up rumor floated the same day. Intel's delay on Cedar Trail Atom processors has now allegedly come from "competition from tablet PCs," which in the current market is shorthand for the iPad.

Acer and ASUS were still poised to see their netbook sales drop in this view. ASUS wouldn't ship any more than 4.8 million netbooks for all of 2011, and its expectations were now between four million to 4.2 million for 2012. Acer, currently the leader in netbook sales, would fall further as it will have shipped more this year but declined roughly to ASUS' level.

With Samsung possibly quitting netbooks entirely, the category is expected to contract rapidly in 2012 as tablets like the iPad take over. Echoing Acer VP Scott Lin, the sources believed that "emerging markets" like China were still viable but that North America, Europe, and other first-world countries had been marked as all but off limits for netbooks through the iPad and a crop of Android tablets, including those from Acer, ASUS, and Samsung themselves.



By Electronista Staff
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Comments

  1. Salty

    Professional Poster

    Joined: Jul 2005

    +15

    This is bull

    This is bull, if Jobs was still alive he'd be raging against the idiots at Intel offering this bull. Why the h*** should Intel care if these people are marketing ultra books, they're using processors made by Intel they make just as much cash if Apple sells a computer with their chip as if Acer does. They should be welcoming the fact that they're no longer tied to the Microsoft dinosaur.

    Ugh, if anything this is just going to push Apple toward using ARM in the MacBook Air.

  1. iphonerulez

    Dedicated MacNNer

    Joined: Nov 2008

    +11

    Why the heck is Intel

    subsidizing computer makers? What does Intel gain by this action? It really seems like an unfair bias against Apple. Why is it that these Wintel vendors can't compete fairly against Apple since supposedly Wintel PCs should have a better financial model due to Windows being a fairly open OS that any company can use on any hardware. Did Apple computers ever get subsidized by Intel when it only had a tiny market share as Windows lorded over everything.

    Comment buried. Show
  1. chippie

    Fresh-Faced Recruit

    Joined: May 2009

    -21

    @iphonerulez-Unfair bias is

    apple getting thunderbolt exclusively a year before all other vendors. What a coup for apple with all the fanatastic thunderbolt peripherals(not). This act should have been illegal.

  1. TomMcIn

    Fresh-Faced Recruit

    Joined: Dec 2001

    +5

    Windows Subsidy

    Would have expected Apple to have a "me too" clause in their use of Intel processors and should be able to pass the equivalent savings on. Having to subsidize Windows machines shows their complete lack of creativity - but it has been that way for decades.

  1. Paul Huang

    Mac Enthusiast

    Joined: Sep 1999

    +4

    Make the intel sticker 50X bigger, please

    Of course, those makers are going to use slower/close-out chips.

    There is no free lunch.

  1. SockRolid

    Forum Regular

    Joined: Jan 2010

    +4

    Intel isn't "anti-Apple"

    Intel is watching the entire mobile industry go ARM. Mobile is the fastest-growing segment of the computing industry. And it's only a matter of time before Apple and everyone else migrates their laptops to ARM-based processors. Even Microsoft is talking publicly about Windows 8 on ARM.

    No, Intel isn't anti-Apple. Intel is simply trying to milk as much money as they can from their traditional CISC processor designs. And if that means paying the ASUS-es of the world to build high-end laptops, then that's what Intel will do. Of course, it's unsustainable, but so is the ever-increasing complexity and cost of CISC architectures.

  1. Inkling

    Dedicated MacNNer

    Joined: Jul 2006

    +2

    Intel's motives

    SockRock is right, Intel is not anti-Apple. It'd be crazy to anger one of its largest customers. But right now it doesn't need to fear low-end Atom chips. But it does need to sell chips to people who for some reason won't or can't buy Macs and for that it needs a healthy ultrabook market. A MBA-dominated market would probably mean less total sales for Intel. And if that motivation is true, Intel will probably give Apple similar discounts. As someone who thinks the low-end MBAs are overpriced, I'd welcome that.

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