Fri, Jul 15, 2011 - Page 12 News List

Don’t count on ‘ultrabook,’ says Daiwa analyst

REPLACEMENT DEMAND:A Daiwa report says the thin and light laptops may not be enough to revive growth in notebooks and may dilute profit margins

By Jason Tan  /  Staff Reporter

While PC makers are betting on “ultrabooks” to entice consumers to upgrade to the soon-to-be-launched thinner, cheaper notebooks with longer battery life, a research house apparently thinks otherwise.

“While some believe ultrabooks could revive notebook growth and Asustek [Computer Inc (華碩)], the first to introduce the ultrabook, should benefit, we think the ultrabook is killing notebook contract makers’ premium lines and may dilute their profit margins,” Daiwa Capital Market analyst Calvin Huang (黃文堯) said.

“We forecast zero growth for global notebook shipments for 2011 and believe the ultrabook alone may not be enough to revive notebook growth in 2012,” he said in a report dated Wednesday.

At the Computex trade show early last month, Intel Corp introduced the ultrabook platform, which it said would make notebooks thinner, lighter and more affordable, with price tags of less than US$1,000. The battery life would be for more than 10 hours.

These ultrabook notebooks are intended to compete with Apple Inc’s MacBook Air, whose worldwide shipments could easily top 600,000 units per month, the report said.

Asustek general sales manager Kevin Lin (林福能) said on Monday that the company was on schedule to debut its first two ultrabook notebooks in September.

He said depending on the specifications, some may cost more than NT$30,000 (US$1,041).

Daiwa said Intel was lowering the price of its low-voltage processors to make thin and light notebooks mainstream.

“In other words, Intel is cutting prices to stimulate notebook demand,” Huang wrote.

Intel’s subsidy is not enough because to make an ultrabook, other advanced and expensive components, like ultra-thin panels, solid state drives, metal casings and polymer batteries, are required to make it comparable to the MacBook Air.

Huang said these advanced components generally cost 50 to 100 percent more than mainstream components used in notebooks.

Because of this, to match the MacBook Air’s price tag, Taiwanese notebook contract makers may have to compromise and use second-grade components in the ultrabooks, which could compromise performance, he said.

The other deciding factor is that Microsoft Corp’s Windows 8 may or may not add to the overall user experience of ultrabooks, and consumers would only be able to tell when the operating system finally comes on the market late next year, Daiwa said.

Despite Daiwa’s pessimism, Compal Electronics Co (仁寶), the world’s second-largest notebook contract maker, said last month it believed ultrabooks would revive sluggish notebook sales.

Compal president Ray Chen (陳瑞聰) said ultrabooks would spur consumers to replace their older laptops, and replacement demand would boost overall shipments starting from the second half of next year.

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