Of Intel's Ultrabooks, Wine tasting, and the Battle ahead

Anirvan Ghosh
Updated: Apr 1, 2012 12:16:52 PM UTC

I started covering corporates in 2007, and have written on business strategies, and on start-ups and entrepreneurs. At that time, the world economy was booming, and ghosts of the market crash of 2000 laid to rest. I write on the challenges facing Indian firms in the changing economic scenario that is characteristic of our times, and how they are devising innovative strategies and products to keep growing, and stay profitable in times good, not so good, and bad. I also write on the interesting and sometimes entertaining aspects of covering events, and which go beyond just news to bring the other side of the picture as well.

Most of Delhi's main roads were jammed the other day as police put needless roadblocks as part of security measures for Hu JIntao, the Chinese president, who is staying at the Oberoi, which happens to be smack in the middle of a busy arterial road.

When I reached the Shangri-La, the event had not started. It got delayed for over half an hour with no reason given. Just like Intel itself got late to the tablet party. And even with the launch of the Ultrabooks (Intel uses this term for thin laptops), the main challenge remains the same - how to join in the blockbuster success of tablets which they failed to anticipate and where they don't have a single offering? Intel is banking on cheaper ultrabooks to do the job for them.

Earlier this year Microsoft announced an end to their long standing partnership and said it would make its Windows 8 software compatible with ARM chips, which rules the tablet and smart phone market. That was a vindication of ARM's move into designing laptop chips, a clear attack on what has been Intel's frontier.

Intel has been on the sidelines for mobile phone chips as well, and could only watch as players like Qualcomm and Texas Instruments shot ahead in the race, powering smartphones the world over, perhaps to a point beyond Intel's reach even with its formidable resources. Intel announced its long-expected entrance into the smartphone and tablet chip market earlier at Consumer Electronics Show in January this year, unveiling plans for Motorola Mobility and Lenovo phones running Google's Android system on Intel's new 'Medfield' chip. But those are yet to be tested and by the time they are launched, the world might have moved a little further.

Ultrabooks will be a good test of the progress Intel is making towards a tablet chip, because these thin laptops need to conserve energy, and avoid heating up. Because Intel wants to have touchscreens for these laptops, it will also be an indicator of whether it can go the whole hog and be successful with tablets. Success would be critical - 67 million tablet units were sold worldwide in 2011 alone – and that figure is expected to almost quadruple by the end of 2015 to 248.6 million. In addition, smartphone sales reached 468.9 million units in 2011, a 66.7 percent increase year-over-year. That figure is predicted to reach an incredible 1 billion in 2015. In both these categories, the ARM alliance, which includes NVIDIA and Qualcomm who make the chips based on ARM designs, raced ahead leaving Intel at the starting point - and it has remained just there the last three years. And India is important as 40% of those sales are going to come out of Asia.

The event in Delhi, which included an elaborate wine tasting session, is part of Intel's biggest marketing effort since their 2003 'Intel Inside' campaign. A key part of that is how Intel powered ultrabooks will go beyond traditional laptop functions and include touchscreens. But among the ones displayed at the event, Acer and ASUS ultrabooks looked similar to Apple's MacBook Air, while HP and Samsung looked cheap versions of the same.

That wasn't a very encouraging sign. When the entire marketing effort has been around how your chips are going to power devices that can do both the job of a tablet and a laptop, this event was a dampener. But it did score on the price point - these thin laptops will start off at Rs 45,000, much less than the price of a MacBook Air, and this is expected to drive volumes. The high-end ones, like Dell's XPS 13, go up to 80,000 which is near the price of the top-end Macbook Air.

This step should work for Intel and the OEMs it supplies to. But this market, while growing, is not red-hot like the tablet and smartphone markets and Intel has its task cut out for the rest of the year and it cannot afford to come up short yet again. That would mean that while ARM and Qualcomm attack its laptop business by the end of this year, it has no ammunition to invade their territory - that is tablets and mobiles. It would be a failure it cannot afford.

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