Ultrabook makers pushing Intel for 50% discount on CPUs

By on August 16, 2011, 4:00 PM

Intel is pushing hard to make "Ultrabooks" hot-selling items in the upcoming holiday season, investing in manufacturers that innovate on hardware design and providing a bill of materials to show that the $1,000 price point can be reached. Many of its OEM partners are worried about missing out on their profitability marks, though.

According to a DigiTimes report, notebook vendors are asking Intel to supply Ultrabook CPUs at 50% discount to help increase their margins. The chip giant apparently rejected the proposal and is only willing to provide 20% discounts to first-tier notebook players, reducing the Core i7-2677 to $317, i7-2637 to $289 and i5-2557 to $250. That's still at least a quarter of the total cost of an Ultrabook, and considering these machines will likely carry solid state drives to comply with Intel's instant-on requirement, it's easy to see why OEMs are asking for a bit of leeway.

Intel itself currently gets 60% gross margins on its processors, but the company is reportedly worried that further cuts would depress prices for its mobile CPUs across the board, impacting its own profitability.

In the next 18 months, the company is hoping to eventually have really thin, really responsive systems down to truly mainstream price points of around $600, and by that time Intel predicts the category will account for 40% of the notebook market. In the meantime slightly larger computers are already available at affordable prices; it remains to be seen if Intel can carve out a market out of Ultrabooks and if OEMs will play ball when it comes to pricing to get it off the ground.

User Comments: 6

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gwailo247, TechSpot Chancellor, said:

Intel: "So just so I'm clear on this, you want me to take a cut in my profits so that you can have bigger profits?"

Vendors: "Yes."

Intel: "Why don't you take a (expletive deleted) Bulldozer and (expletives deleted) and then you'll (expletive deleted) a diamond. Then you can use that diamond to pay me the quoted price."

Vendors: "I guess that's a no."

Intel: "Are you sure? We have a partnership with Unilever, I'm sure they can provide one of their petroleum based products to make the Bulldozer to diamond transition more pleasant."

Archean Archean, TechSpot Paladin, said:

Why don't Intel simply make one for themselves? That would only increase their profit. Although I am not sure how 'Intel Inside' will look on an Intel made notebook.

Xero07 said:

Archean said:

Why don't Intel simply make one for themselves? That would only increase their profit. Although I am not sure how 'Intel Inside' will look on an Intel made notebook.

They don't have the manufacturing facilities to assemble laptops. They would also have to make connections with display manufacturers and other part manufacturers they dont make.

Archean Archean, TechSpot Paladin, said:

I know, but if others are dragging their feet (with some genuine + some not so genuine) issues, you have only two options a) ditch the idea, b) do it your self.

captaincranky captaincranky, TechSpot Addict, said:

I hope they hit the street with "ultra books" soon, so I can get not buying one out of the way quickly.

It will be a satisfying process, almost as satisfying as not buying an iPad, and not regretting it one bit.

If any of you think picking up a standard notebook is too difficult a test of physical ability, go try picking up the cylinder head to a Cummins diesel.

Archean Archean, TechSpot Paladin, said:

I don't think standard notebooks are any 'difficult' to carry around, I mean look around you'll see many 'physically challenged' people carrying around xxxx lbs of 'extra' weight.

I still haven't made up my mind about these thin notebooks, that are they just fad or is there a future for them. Although I am leaning towards the earlier.

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