Ultrabooks and Windows 8: Soulmates Needing Each Other

In the months leading up to the critical Christmas season and 2012, computer manufacturers are banking on ultrabooks to stimulate value sales. However, Euromonitor International believes that sales of ultrabooks will fall short of manufacturers’ expectations.

Ultrabooks

An ultrabook, a term coined by Intel Corporation, is the Kate Moss (the model who signalled the era of wafer thin models) of laptops. Ultrabooks essentially combine laptop-like processing performance with the slimness and long battery life of a tablet.

This seemingly great value proposition has one significant flaw – cost. Manufacturers had to incorporate expensive solid state drives (SSD) in order to reduce weight and thickness, improve battery life and reduce boot-up and resume time. Accommodating the Windows 7 operating system (OS) also meant that manufacturers had to either offer a combination of hard disk drive (HDD) and sold state drive (SSD) or a higher capacity SSD. The former compromises weight, slimness and battery life due to the usage of an HDD which is bigger than an SSD and consumes more power. Ultrabooks with a higher capacity SSD will also be more expensive than an HDD/SSD Ultrabook.

Poor consumer confidence is particularly bad news for manufacturers betting on their ultrabook line-ups to drive value sales. Consumers have been unwilling to spend on premium-priced electronics, with the exception of Apple-branded hardware, and this is unlikely to change in 2012.

Windows 8

Wintel (Windows based, Intel-powered) computers have been the centrepiece of the computer market, but with increasing consumer interest in touchscreen interfaces and ultra-portable devices, tablets are the current favourite and both Microsoft and Intel risk being left out of this new growth category.

Global Retail Volume Sales Split of Computers

Euromonitor International.

In early autumn 2011, Microsoft Corp released an early developer build of Windows 8, marking the software giant’s entry bid into the touch-centric post-PC era. Windows 8 will be a significant departure from the company’s previous platforms. The user experience will be focused on touchscreen functionality and consistency of experience across a wider range of device types.

Computer manufacturers can look to the various Windows 8 builds and create products according to different product propositions and various price points.

Which company will suffer more?

In the meantime, sales of ultrabooks running on Windows 7 are expected to continue to languish and not be the saviour that manufacturers were hoping for as price proves to be a major hurdle due to the hardware requirements needed to run the current OS.

Acer Inc (Acer) and AsusTek Computer Inc (Asus) are two of the most aggressive pushers of ultrabooks and the coming year is expected to be less than jolly for these two Taiwanese manufacturers which depend heavily on hardware sales.

On the other hand, computer sales accounted for less than 20% of Hewlett Packard Development Co LP’s (HP) operating profit for its financial year ending 31 October 2011. The lack of traction for ultrabooks will affect HP less than Acer and Asus.

Question of timing

Despite promising reviews from developers, Windows 8 will not be available until late 2012 and the first version will only run on Intel processors. Windows 8 that can run on ARM-powered devices is expected to be available in 2013. Typically, manufacturers require a minimum of six months for the development team to work on the product which means tablets and laptops running on an ARM processor will be available to consumers in the second half of 2013.

Sales of computers (except tablets and other portable computers) are expected to only pick up momentum in late 2012 and only grow by less than 2% compared to the previous year as consumers hold off from new purchases until the launch of Windows 8.

Ultimately, the ultrabook’s proposition of combining the best of laptops and tablets can be a strong sales generator if it can fulfil the promise of tablet strength, low cost and weight. Fulfilling half of the promise in offering a lighter laptop will not be sufficient to entice consumers.