Are ultrabooks the last chance to save the PC industry?

6 Sep 2011

It is clear already that Apple’s first mover advantage in releasing its MacBook Air ultra-slim personal computer is upsetting the apple cart (no pun intended) for rivals keen to grow revenue again. With the PC business on the decline, could ultrabooks be the road to salvation?

PC sales as we know it are on the decline, driven largely by the economic recession but also by the popularity of the new form factor tablet computers (chiefly, the iPad). What the iPad and the iOS ecosystem taught manufacturers was that buyers today want computers that are instant-on, easy to use and want to access the software they need without hassle.

They want affordable computers that are light and versatile but beyond tablets, they still want to work and get the job done. So devices with keyboards will still matter. So personal computers aren’t finished, people just want light and versatile, which must be a relief for Microsoft, which is about to bring out its Windows 8 operating system which will be compatible with the new generation of PCs and tablets.

Unlike the iPad, Apple’s MacBook Air is still in the shape of a notebook computer, but has borrowed heavily on the iPad’s winning formula of instant-on and easily downloadable apps. No one wants to fumble with discs any more, they want their apps whether on a smartphone, a tablet or a notebook.

It emerged earlier today that Apple’s success with the MacBook Air has resulted in rival vendors Acer, Lenovo, Toshiba and Astutek limiting the number of ultrabooks they will release in the crucial fourth quarter to less than 50,000, according to Asian tech news service DigiTimes. This is likely to be down to a shortage of components, but also nervousness in light of the continuing decline of the PC business. PC makers are afraid they’ll get burned if consumers turn their noses up at these new ultrabooks.

My instinct is that Apple simply got there first and the fact it is the only PC seller growing revenues in Western Europe is down to the success of both its iPad and MacBook Air.

Semiconductor giant Intel, which earlier this year dismissed the end of the PC, knows full well this is the shape of computing to come. I saw Intel CEO Paul Otellini confidently claim the future of the PC is assured at the Consumer Electronics Show in Las Vegas earlier this year.

Indeed, the latest MacBook Air comes with the latest Intel Core i5 and i7 dual-core processors and Thunderbolt I/O technology, for example.

Intel is stoking the flames of ultrabook demand

Last month, Intel Capital announced a US$300m Ultrabook Fund to help drive innovation in this new category of devices.

“Ultrabook devices are poised to be an important area for innovation in the US$261bn global computer industry,” said Arvind Sodhani, president of Intel Capital and Intel executive vice-president, at the launch of the new fund. “The Intel Capital Ultrabook fund will focus on investing in companies building technologies that will help revolutionise the computing experience and morph today’s mobile computers into the next ‘must have’ device.”

The key to the success of the ultrabook segment will be the deployment of sleek designs with thin, but powerful computing power.

It seems that by being first, Apple has commandeered much of the components needed to produce sleek, profile devices, particularly in Asia, where these devices are being manufactured.

It is understood that Intel is keen to break down the supply bottlenecks that are holding other players back and is holding a conference on ultrabooks next week.

The key for ultrabook manufacturers will be price. Apple has always made reassuringly expensive products that its dedicated (and growing) customer base is happy to shell out for. The lowest-cost version is €999 rising to almost €1,600 for the most feature-rich model.

So can companies make devices that cost less than that and at the same time not cannibalise their existing notebook product lines that range in price down to €400 or as high as €2,000?

Another question to consider is whether the netbook business, already damaged by the popularity of tablet computers, will not be wiped out altogether?

In the coming months, manufactures like Acer, Lenovo and Toshiba will start deploying ultrabooks and will no doubt be joined by Dell and Sony.

Intel has a stated goal of 40pc of the consumer notebook market being served by ultrabooks by 2012. If that is the case, then Apple’s rivals will have to work fast, rather than stepping so gingerly into the water.

Photo, above: Apple’s MacBook Air

Image below: An Asus ultrabook that could vie with Apple’s MacBook Air

Asus ultrabook

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years