Can Ultrabooks Compete Against MacBook Airs on Price?


Intel has developed a ready-made spec for ultrabook part costs to help placate Windows PC builders who complain they can’t compete on price with Apple, notebook designers slipped out late Thursday. The raw bill of materials, before assembly, is supposedly between $475 and $650 for thicker 0.8-inch models and $493 to $710 for systems at the thinner 0.7 inches of the MacBook Air ultra books are designed to imitate.

Apple is a major Intel customer. And it looks a bit unwise for Intel to be catering to Apple competitors who want to build Ultrabooks, a class of notebooks that is very thin and light, to compete against the MacBook Air. Of course, Intel is in the business of selling lots and lots of CPUs. But what if in the course of drumming up its CPU business it pisses off Apple?

That might not be so good. Apple is one of the few companies that have the ability to design CPUs and get them contract manufactured. It isn’t rocket science to figure out the ARM core, which the Apple A5 uses, will continue to get more powerful. And at some point in the near future it will be powerful enough to run a full-blown desktop operating system like OS X. And then combine that eventuality with a future OS X that is smaller, and more optimized.

From Leopard to Snow Leopard, Apple did what no other company has done: it made the upgrade smaller. By eliminating and optimizing code, Apple made Snow Leopard smaller than Leopard. And by doing that existing Macs ran faster. Instead of requiring more powerful hardware, like what almost every new Windows version does, Apple went the other way.

Once Lion is set meaning most major bug fixes are out of the way, my guess is Apple will ruthlessly and persistently optimize OS X to make it work faster and with less hardware. Less hardware as in an Apple-designed CPU with an ARM core. And the transition to an Intel-free future would probably begin with a future MacBook Air. And when that happens, there is no way any Intel-powered Ultrabook will even come close to being able to compete against the MacBook Air. So if I were Intel, I wouldn’t want to catalyze Apple into accelerating toward a future like that.

Going back to the question of whether or not tomorrow’s Ultrabook will be price competitive with Apple’s MacBook Air: add to the Intel-spec’ed Ultrabook BOM an operating system, iLife-like applications that help you manage photos, create movies and music, all packaged into a beautiful but robust chassis made of high-grade materials and I think it will be very difficult to make any money selling it for US$999.

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