The next big thing is small

Lower prices and Windows 8 expected to boost ultra books sales

• By Naushad K. Cherrayil Staff Reporter
• Published: 20:14 October 15, 2012

Although currently viewed as prohibitively expensive, Ultrabooks or ultra-thin notebooks with Microsoft’s new Windows 8 operating system, are expected to be the next big thing in consumer technology.

Ultrabooks (defined by thinner, lighter bodies, longer battery life and with a shorter boot-up time than typical notebooks) are expected to explode in popularity in the near future as cloud-based systems become more prevalent and reducing the need for a traditional hard drive.

An Ultrabook has to use one of Intel’s Core microprocessors, not any other chip from the company – let alone a chip from rival Advanced Micro Devices, whose chips have lately been found in some thinner laptops. For a laptop with a 14-inch screen, the system can’t be thicker than 18 millimeters, according to Intel’s specifications.

Much of the extra weight and price in normal laptops comes from stuff you will never use, like an optical drive to watch a DVD. So why not do away with it and lighten the device by around 300 grams? That is what the ultrabook does. It also shifts from a hard disk drive to the solid state drives which cut another few hundred grams. You do not really need that 500GB hard drive in a laptop.

“The key factor is the pricing. Intel executives said from the beginning of the year that the market would not really take off until Ultrabooks were priced at $699 or so. Though some models have reached that point–or even lower–many more of them cost $1,000 or more,” said Craig Stice, a senior analyst at IHS iSuppli.

However, GBI Research expects this to change over the next five years as the Asia-Pacific region is expected to become the biggest buyer of Ultrabooks in 2016, with an estimated 55 million units. The Americas are predicted to come second with 54 million unit sales, while Europe, the Middle East and Africa (EMEA) will come third with combined sales of around 40 million.

Some help for Ultrabooks should arrive late this month along with Windows 8. Among other things, the software has a new interface that works with touch, enabling the use of clamshell-style laptops in a touch mode as well as models that convert into a tablet orientation.

But that trend could affect the pricing equation also, Stice said. A touchscreen is expected to add around $100 to the price of a laptop.

He said that PC makers could choose to bring touch to Ultrabooks at around a $799 price point. Or they could reserve the feature for higher-end devices.

IHS iSuppli has lowered its forecast and said the industry is on track to ship 10.3 million ultrabooks worldwide in 2012.

The global PC shipments are set to fall for the first time in 11 years this year as consumers, cautious about the global economy, hold off on computer purchases in favor of mobile devices.

That means the market will total about 348.7 million units in 2012, down 1.2 per cent from last year.

“So far, the PC industry has failed to create the kind of buzz and excitement among consumers that is required to propel ultrabooks into the mainstream,” said Stice.

“This is especially a problem amid all the hype surrounding media tablets and smartphones. When combined with other factors, including prohibitively high pricing, this means that ultrabook sales will not meet expectations this year.”

PC makers generally have been looking to ultrabooks to boost the ailing market. “Optimism has vanished and turned to doubt, and the industry is now training its sights on 2013 to deliver the hoped-for rebound,” he said.

Consumers and companies alike also remain drawn to smartphones and tablets, which continue to eat up PC sales.

According to Denzil D’souza, business head of notebooks at Samsung Gulf Electronics, “It is true that ultabooks haven’t picked up momentum so far, but we [vendors] are optimistic for the years to come. Market co exists for both ultrabooks and tablets.”

PCs are going through a severe slump while ultrabook prices have come down a little, there are still some “significant challenges that will greet Windows 8 in the coming quarter,”Jay Chou, senior research analyst, Worldwide PC Tracker.

“Windows 8 and ultra-slim notebooks are going to create demand for notebooks next year in the Middle East and Africa,” said Fouad Rafiq Charakla, Research Manager at IDC MEA.

“If prices go below $800, then there will a spurt in demand for ultra-slim notebooks. The prices have fallen this year. A couple of vendors have reached close to the $800 price point in the region while others are still about the threshold,” he said.

“I don’t see why end users will not go for the ultra-slim notebooks where they can take advantage of the light weight and long battery time if prices fall below $800,” he said.