Intel's Marketing Machine Might Backfire

Hey, Intel (Nasdaq: INTC  ) ! Loose lips sink ships, you dig?

The chip giant is putting its back into marketing the new Ultrabook laptop format. Apple started that idea with its Macbook Air, but Intel hopes to refresh a flagging PC market by extending the thin and light concept to other system builders. Ultrabooks are already sitting on store shelves, but the real advertising offensive will start in April. Intel may spend more than $300 million on just the promotion campaign, according to Reuters.

Maybe that's not the best idea ever. Reports from the CES showroom floor say that Intel rival Advanced Micro Devices (NYSE: AMD  ) will latch onto Intel's expensive marketing campaign ... and then undercut its system prices by several hundred dollars.

AMD's super-light notebooks should hit stores starting at $500 apiece, well below the $800 price point Intel caters to today or even the $700 goal Chipzilla set for the end of 2012.

It's not an automatic success story, of course. AMD still has to deliver competitive Trinity processors for its ultrathins, and its desktop brethren are not looking good so far. Selling inferior laptops purely on a pricing advantage would be a losing battle. After all, Apple's airy original sells for a serious premium to other notebooks -- or Ultrabooks.

Moreover, Intel adds some unique features to its Ultrabooks, such as voice and gesture control courtesy of a contract with Nuance Communications (Nasdaq: NUAN  ) . Nuance and Intel call this a "partnership," though it's not clear whether the software is exclusive to Ultrabooks or also available for competitors like AMD. If it's exclusive, we're looking at a major selling point that needs to be properly marketed.

I'm hanging off the edge of my seat to see how Intel's marketing division will handle this delicate situation. The company must not only promote a new class of thinner and lighter machines, but also make it perfectly clear to the average consumer why Intel-powered ones are better than the competition. That's not as easy as it sounds, even if it happens to be true.

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Fool contributor Anders Bylund holds no position in any of the companies mentioned. The Motley Fool owns shares of Apple and Intel. Motley Fool newsletter services have recommended buying shares of Apple, Intel, and Nuance. We have also recommended creating bull call spread positions in Intel and Apple. 

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinion, but we all believe that considering a diverse range of insights makes us better investors. Check out Anders' holdings and bio, or follow him on Twitter and Google+. We have a disclosure policy.


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  • Report this Comment On January 13, 2012, at 12:15 PM, Colin1497a wrote:

    It's so cute that people think that the Macbook Air started the idea when the Macbook Air was simply Apple's entry into a market for ultraportables that had existed at least 5 years prior. A more correct statement would be that Apple popularized it, and that prior to Apple's entry it was mostly business executives who traveled extensively who bought notebooks in this segment.

  • Report this Comment On January 13, 2012, at 7:59 PM, jbelkin wrote:

    You're absolutely right on target - what Intel's branding will tell consumers is LOOK AT THIS 25 TOTALLY UNIQUE ULTRABOOKS THAT ARE THE SAME SINCE IT HAS INTEL INSIDE!

    ... and that by generic design staffs, no one can tell apart from each other except by price so again, PC makers fight by price ... and then AMD fuels that fire to lowest by undercutting Intel ones by 50% ... so after all this investment, PC manufacturers will be scrapping by on .05% margins selling these at $499 because NO ONE is willing to pay more than that for a WIN PC experience.

    Staying 100% above the fray or really 10,000% going by Apple's margin's of 40%, Apple will be a few dollars more but will stand above the fray with high quality build and buyers know, they are not going out of the ultrabook business.

    Intel is commodity. Apple is brand name. That is the 40% margin difference.

  • Report this Comment On January 13, 2012, at 9:00 PM, unomi wrote:

    While AMD's handling of Bulldozer for the desktop market failed to impress - they have quite good offerings on the laptop side already. Trinity should be able to make further strides on the APU front, and software support for GPGPU is slowly but steadily widening and deepening.

    I do all my work on an AMD E-350 based laptop and have no complaints, I'll still pick up a Trinity based on when it comes out though :)

    While Apple is certainly a powerful brand, I would say that its success on the laptop front owes a fair bit to 'not running windows', hopefully that will contribute to even further adoption of other, more capable, operating systems.

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