AMD: Intel is overestimating ultrabook market
PC chipmaker AMD's chief executive is betting that its larger rival Intel has overestimated consumers' willingness to pay top dollar for a new category of premium laptops.
Riding the coat-tails of Intel's most expensive marketing push in a decade, new processors from AMD have been chosen for a handful of upcoming laptops in a wave of sleek personal computers with features like "instant on" made popular by tablets.
Targeting mainstream shoppers, thin laptops with AMD's chips, previously code named Trinity, are set to sell in the $600 range, similar to many of the bulkier laptops now on the market and significantly cheaper than the high-end, Intel-powered ones increasingly appearing in stores.
"It seems like an opportunity to steal the bacon and go in there and capture this huge opportunity that someone else generated," AMD Chief Executive Rory Read told Reuters in an interview. "They missed where the sweet spot of the market was."
Intel has coined "Ultrabooks" to refer to svelte laptops using its processors, with high-quality features like solid-state drives and metal cases.
AMD, always struggling to keep up with its much larger competitor, has been referring more generically to ultrathin laptops.
Hewlett Packard last week unveiled a new " Sleekbook" lineup, with thin models using chips from both AMD and Intel.
All three companies are counting on thin laptops to energize PC sales dulled by a growing preference for tablets.
Intel, whose processors are used in 80 percent of the world's PCs, has invested $300 million in an investment fund to help smaller companies develop technology to use in future Ultrabooks.
The chipmaker's executives last week said that by the holiday season, Ultrabooks will account for 40 percent of all consumer laptop sales.
AMD's Read said prices for Ultrabooks would be too high for Intel to hit that target.
"You get up to those premium price points in a Windows type environment and there isn't the scale to do that. But if you get into mainstream, there's a big opportunity," Read said.
Intel executives told analysts at their annual meeting that PC and component manufacturers in recent years focused too much on bringing down prices and forgot to add improved features to keep laptops exciting.
Intel vice president Kirk Skaugen, leading the ultrabook push, said consumers would pay more for laptops with premium features, which next year will include touch displays.
"We think the experience we're delivering, people are going to be willing to pay for and it only gets better in 2013," he told investors.
Apple's MacBook Air, seen by many consumers as the creme de la creme of laptops, sells for $999 and up. Analysts have speculated the Cupertino, California, company may drop the prices of future models in response to the Ultrabook push.
While AMD stakes out territory at the low end of the price range for ultrathin laptops, analysts believe Intel may have trouble persuading consumers to spend extra on Microsoft Windows-based computers that lack the Apple brand.
"It ultimately comes down to whether Intel is going to be able to enable the supply chain to develop an ultrabook that is competitive with the MacBook Air at whatever new low price they're going to be selling at," said Patrick Wang, an analyst at Evercore Partners.