Intel Rejects Call For Ultrabook CPU Discounts

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News Posted: Tue, Aug 16 2011 2:55 PM
Intel has been working with its OEM partners to ensure that ultrabooks arrive below the Macbook Air's $999 price point, but DigiTimes reports that the company has drawn a line when it comes to CPU pricing. Faced with calls to cut the price of Ultrabook CPUs by 50 percent, Intel has instead given notice that it will offer 20 percent discounts to first-tier notebook vendors.

Grumpy OEMs (presumably the ones who don't qualify for discounts) have pointed out that Intel's high CPU prices are the major cost behind a number of products, including those based on Oak Trail (an Oak Trail platform costs an estimated $95, compared to ~$20 for Nvidia's Tegra 2).  The comparison isn't a particularly good one, given that Oak Trail offers a very different set of capabilities than Tegra, but it illustrates part of the problem.

Ultra-desirable? Time will tell

Intel, needless to say, is unlikely to budge. The company's gross margin is well above 60 percent and expected to stay in that range through the end of the year. It's much easier to lower prices than it is to raise them, and the company undoubtedly prefers to measure consumer response and perception of ultrabooks before it commits to cutting prices in a bid to boost demand.

When we covered ultrabooks earlier this month, we noted that their physical dimensions would require OEMs to solder some components that were normally socketed. This may be something of a mixed blessing for connection manufacturers. On the one hand, Intel's 18-21mm design tolerance has required company's to develop ultra-thin (and higher priced) connectors. On the other, CPU sockets are one expected casualty of the manufacturing process. Companies like Foxconn, which manufacturers a large number of sockets, may find themselves on the losing end of this development.
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Inspector replied on Tue, Aug 16 2011 3:28 PM

Hey if performance is nice i will get this rather then a macbook even if price is higher(Hopefully not too much higher) :P

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rrplay replied on Tue, Aug 16 2011 8:49 PM

Well if the ultrabooks likjke the Asus UX21 with Core i5-2557M and better chips, take off later on maybe Intel will offer a slighly better than 20% discount.Thought I may have read somewhere [CNET?} they maybe expecting "as much as 40 percent of the volume to be in the utra category of chips by end of 2012."

That Asus ultrabook is looking pretty lean 'n sweet to me.

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realneil replied on Tue, Aug 16 2011 9:26 PM

They asked for 50% and Intel gave them 20%,.......sounds like negotiation to me,...

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rrplay replied on Tue, Aug 16 2011 10:02 PM

yep is is a non-negotiation Intel does not want or think ultra books are going to take off and have to raise pricing on the higher tier chips at this time.they are cozy with the 60% gross margins for now.therefore limiting some sales for first-tier notebook players.

Ok here ya go scratch those stock push-pin desktop coolers forever ,>> drop the prices on the i7 i5 M chips and squeeze a real negotiation @ 43 % and let's watch what happens.

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rapid1 replied on Wed, Aug 17 2011 8:18 AM

Hmmm; anyone else hearing an Athlon XP market, Intel chip price screw up here?

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CDeeter replied on Wed, Aug 17 2011 1:55 PM

Yup. Time for Llano to put in an appearance, and maybe Trinity too.

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