Who killed the Ultrabooks?

When Ultrabooks, the MacBook Air clones, started hitting the market the non-Mac users rejoiced that finally there is some competition to the iconic MacBook Air. Acer was one of the first to jump onto the Ultrabook bandwagon, followed by almost all PC vendors-Asus, Lenovo, Toshiba, and Dell. But the irony is that one is yet to see a true Ultrabook meeting all the specifications given by Intel.

THE GENESIS
Last year at Computex 2011, Intel showcased a new laptop form factor that would be based on the 2nd generation of core processors offering mainstream computing at an extremely sleek and thin form factor. One of the unstated objectives was to provide a roadmap of upgrade to the notebook user who got ‘sidetracked' by the iPad and tablet wave. Computing power with ultraportability, combined with aesthetics, seemed to be formula.

For enabling vendors to come out with such devices Intel also created a $300 mn Ultrabook fund. The logic behind Intel's Ultrabook plan was to pump in innovation in the notebook computing space by creating a mainstream laptop that's as light (less than 0.8 inches thick) and portable as a tablet, powerful enough for mainstream computing, and marries hybrid storage technologies SSD/HDD, boots up and shuts down in seconds and offers 8 hours of battery back-up.

It did seem utopian and over-ambitious, but it clicked with vendors and they all came out with Ultrabooks. Many thought this development will break the exclusivity of ultra-portability up till now the domain of Apple's pathbreaking product-the MacBook Air. Clearly Ultrabook challenges MacBook Air and to challenge that exclusivity, Intel made a very interesting specification that Ultrabooks be priced at sub $1,000.

REALITY CHECK
On paper Ultrabooks has all the trappings of a trend in the making and a device for the masses. But there are too many players involved to make that happen. Probably what Intel overlooked when it said Ultrabooks need to be priced at sub $1,000 is that there needs to be a consensus among ODMs and its suppliers and a dire need for a price parity.

As we look at the spate of Ultrabook launches in the last few months in India, there is a clear disconnect in terms of pricing and models launched vis-a-vis other markets in APAC and US, where the consumer has broader cheaper Ultrabook options. The first of the Ultrabooks to hit the Indian shores was the Acer S 3 and it did meet the price bar of sub $1,000 at the entry level offerings at around sub Rs 50,000.

But since it was the first of the Ultrabooks, it got mixed reviews and consumers clearly needed more choices before their Ultrabook plunge. So when Asus Zen Book came it was a shocker at Rs 90,000. Lenovo's Ideapad U 300 Ultrabook (Rs 67,000) is also equally pricey and the HP Folio 13 hovers around Rs 70,000, and the latest Toshiba Portege z830 and Dell XPS 13 retails at the same higher price band. Hence if Ultrabooks is in its truest form as advocated by Intel, there has to be a common base form factor that needs to be followed in verbatim by the vendors.

But yet again, Intel cannot dictate to the ODMs. Some of the ODMs even feel that with fluctuating hardware prices it's extremely difficult to price the Ultrabooks at sub $1,000. Many feel Intel should also keep its chip prices down to achieve this price and form function parity. Quips S Rajendran, CMO, Acer India, "Yes, Ultrabooks are priced much above the mainstream laptops but I see the adoption picking up as we move ahead. All slim factor notebooks cannot be called Ultrabooks, there will be Ultrabooks and slim and light notebooks-we need to differentiate between the two. What we are doing from an Acer point of view is that we are creating our value slim portfolio which will complement our Ultrabook products." Vendors like Dell also echo an almost similar sentiment. Says Shishir Singh, director, product marketing, CSMB, Dell India. "Ultrabooks are one part of the larger, sleek form factor Notebook strategy at Dell and our aim is to
deliver more choice to the customers through a combination of form factors. I do not think of the higher price as a matter of concern as Ultrabooks now goes the top end, and hence in those segments customers does not mind helling out more for the value Ultrabooks brings to the table."

OUTLOOK
Clearly at the end of the day, the vendors are having a free hand in design and that has made the Ultrabooks a fuzzy segment. But the critical component from an India perspective is pricing.

Right now most of all with the exception of Acer entry level Ultrabooks, others priced at Rs 70K and above make it an extremely niche category. Moreover most of the vendors armed with the learnings they have got from creating Ultrabooks are coming out with their own ‘slim and light' form factors. This will definitely put the brakes for Ultrabooks as the customers will compare between these two light form factors.

Right now in India, it's surprising that vendors have chosen to launch only high-end Ultrabooks and by and large ignored the lower price bands. Clearly they do not want the Ultrabooks to upset their conventional notebook portfolio in which they have huge traction in both consumer and commercial segments. Unlike in evolved geographies like US, in India, vendors clearly want more volumes from conventional offerings and position netbooks and low-cost notebooks at the lower end and
still continue to invest their energies in conventional mainstream notebooks. And now they are trying to cannibalize the Ultrabook segment by launching their own slim form factors notebooks. If this trend continues, Ultrabooks in India by and large will remain exclusive for the ultra rich.