Taiwan’s Asus has been a keen early supporter of Intel’s ‘Ultrabooks’, with chairman Jonney Shih appearing on stage with Sean Maloney, head of Intel China, to make the announcement and show off the first model in May.
The vision was for these thin, responsive notebooks to revolutionise the traditional PC industry, which has come under increasing challenge from smartphones and tablets. Intel’s ambition is for ultrabooks to make up 40 per cent of the consumer notebook PC market by the end of next year.
Yet the reality, Asus’ chief executive Jerry Shen said on Friday, is that a 40 per cent share is “a very aggressive target that would be difficult to meet before 2013”.
Asus, the world’s fifth biggest PC maker by sales, expects its ‘U’ series of ultrabooks to account for 20 per cent of its notebook sales next year.
Mr Shen outlined two main reasons for why 40 per cent would be difficult to reach. The first is because of the technical difficulties involved in designing and manufacturing the super-thin Ultrabooks.
“The CPU for Ultrabooks is very powerful, so there is a heat problem that is very difficult to resolve,” he said as an example.
There is also currently limited capacity in the supply chain to produce the specialised components needed to make Ultrabooks much thinner than traditional notebooks. Mr Shen estimates, for example, that Asus’ suppliers have enough capacity currently to make a maximum of 200,000 ultrabooks a month. Beyond that, additional investments in the supply chain would need to be made to boost capacity. (As a reference, Asus shipped 3.1m notebooks in the second quarter, or roughly 1m notebooks a month.)
Given the technical difficulty and the fact that ultrabooks are a new product category, Asus will be targeting the high-end market for Ultrabooks, with five to seven models sporting prices ranging from $799 to $1999.
Mr Shen believes that to reach 40 per cent, “you would need to develop the low and mid-range market as well. That takes time”. Given Mr Shen’s comments, it would also appear to be a segment that Asus is not keen to develop quickly itself, especially if they succeed in the high-end market.
Intel, at least, is aware of these obstacles, and had earlier this month established a $300m ultrabook fund to address this. David Flanagan, a managing director at Intel Capital who is in charge of the fund, told me that he will focus its investment on three areas, one of which was in the slim components needed to bolster the ultrabook supply chain. The other two are new ingredients for notebooks, such as integrating sensors or gesture software, and software and services such as cloud-based storage.
Mr Flanagan recognised that there were currently supply chain constraints on lowering the cost ultrabooks, but said this was largely a teething problem that would gradually be resolved. He also pointed out that new functions and ingredients would be continuously added to ultrabooks so consumers would get more for the same price.
“I would expect the value of [the ultrabook] platform to increase as time goes on,” he said.
That may be so, but will it be enough to hit the target by the end of next year?
