Ultrabook Sales Underwhelm Initially - InformationWeek

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Ultrabook Sales Underwhelm Initially

Super-slim laptops aren't a disaster, but neither have they become the next big thing. Will Windows 8 change that?

Tablet Vs. Ultrabook: 10 Ways To Choose
Tablet Vs. Ultrabook: 10 Ways To Choose
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Ultrabooks, Intel's answer to Apple's hyper-portable MacBook Air, aren't selling as well as anticipated. Research firm IHS iSuppli on Monday revised its near-term forecast for ultrabook shipments, noting that the slender laptops are falling short of expectations this year.

The firm now believes that 10.3 million ultrabooks will ship worldwide in 2012, down from a previous estimate of 22 million units.

Craig Stice, senior principal analyst for compute platforms at IHS, said in a statement that the PC industry has failed to generate any excitement about ultrabooks among consumers, a shortcoming highlighted by the hype around mobile devices.

But it's premature to conclude that ultrabooks are a disaster, for several reasons.

[ Read Apple's Top 20 Public Apologies. ]

First, lack of ultrabook momentum has been a recognized issue for a while. Other research organizations like Gartner offered similarly underwhelming ultrabook shipment estimates in July. "Despite the high expectations for the thin and light notebook segment, ultrabooks, shipment volume was small and [had] little impact on overall shipment growth," Mikako Kitagawa, principal analyst at Gartner, said at the time.

David Daoud, a research analyst at IDC, said in a phone interview that while pessimistic people might characterize the situation as a disaster, he'd be more inclined to view it as a period of transition. IDC, he said, anticipates about 214 million mobile notebooks will be sold in 2012, about 5%--10.7 million--of which will be ultrabooks.

But looking further out, iSuppli itself sees shipments reaching 44 million in 2013 and 95 million by 2016. Not a disaster but not quite global mobile phone sales either, which Gartner said reached 419 million in just the second quarter of 2012.

Second, high ultrabook prices are expected to come down. IDC in July observed, "Ultrabooks have not yet produced a significant rise in volumes--in part due to anticipation of improvements such as Windows 8, which is expected later this year, but also due to pricing."

Economic weakness around the globe, particularly in Europe, persists and such conditions have dampened enthusiasm for ultrabooks, particularly at current prices. iSuppli says ultrabooks need to move down to the $600 price range from their present $1,000 level.

During Intel's Q2 2012 conference call for investors in July, CEO Paul Otellini promised that ultrabooks would hit that price point. "Ultrabooks continued to build momentum, and achieved our volume goals for the first half," he said. "...With visibility into this many designs, we are very confident that we'll see $699 systems at retail this fall."

Third, much of the tech industry is holding its breath for Windows 8, becalming ultrabooks in the process. Apple experienced a similar sales slowdown over the summer as consumers delayed purchases in anticipation of the release of the iPhone 5.

"We are definitely headed toward an ultraslim market," said Daoud. But it remains to be seen whether seekers of slim will buy ultrabooks or something similar, like a Microsoft Surface tablet, an Android tablet, or one of Apple's anticipated small form factor iPads, expected to be introduced later this month.

Daoud sees a problem with vendors' focus on hardware designs. He foresees consumers looking beyond technical specs to things that will make the user experience better, like the availability of an app store for the device. He also expects businesses to sit on the sidelines for a while, until Windows 8 has been available for a few months and IT departments resolve whether ultrabooks require any change in the way they manage devices.

Yet there is hope for Intel and ultrabook makers. Google Trends suggests there's at least growing interest in ultrabooks and continued attention paid to pricing. Now a PC maker must produce a $699 ultrabook that appealing and Windows 8 must be brilliant. Still no one expects Apple to rest on its laurels.

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