The Huge Problem With Ultrabooks

Out with the netbook, in with the ultrabook! The term, touted by Intel (Nasdaq: INTC  ) , describes a featherweight laptop built in a smaller form factor yet with enough internal horsepower to handle a full complement of desktop software. Apple's (Nasdaq: AAPL  ) MacBook Air, in other words.

Not everybody gets it. Ask Amazon.com to find you an Ultrabook and you'll get results for "MacBook Air," "netbook," and "zenbook." The e-tailer doesn't classify ultrabooks as a distinct category, and that's despite Intel claims of 75 ultrabook designs on the way from Asus, Acer, Dell (Nasdaq: DELL  ) , and Toshiba, among others.

Feature-rich and design-poor
To look at the ultrabooks in development is to see sweating PC executives failing to understand that feature lists are immaterial. Call it the "can-do" syndrome. Ultrabooks can:

  • Pack a lightweight PC experience on a 15-inch screen!
  • Accept your voice for common computing commands!
  • Embed touchscreens!
  • Leverage near field communications (NFC) technology!

The whole pitch has a Ron Popeil but-wait-there's-more feel to it, all without explaining why consumers would want one. It's as if the entire industry is saying, "You like the MacBook Air? Then you'll looooove our new ultrabook!" I'm baffled anyone takes these devices seriously.

The first step to fixing the problem is to admit you have one in the first place
PC makers think they have no other choice. Look at the data. PC sales dipped 1.4% worldwide and 5.9% while here in the United States. Hewlett-Packard (NYSE: HPQ  ) led domestic decliners with 26.1% fewer systems shipped in Q4.

Apple was the only gainer. Mac shipments rose 25.8% to 5.2 million in the company's blowout fiscal first quarter. A report in the admittedly sketchy DigiTimes, issued before Apple reported results, says the Air was probably responsible for 1.2 million of that total -- a 20% year-over-year increase.

There's also the iPad to consider. Last week's earnings report from Cypress Semiconductor (Nasdaq: CY  ) suggested weakening Android tablet sales in the same quarter that Apple sold 15.4 million iPads. Amazon's Kindle Fire appears to be the only tab winning the war for customers.

See the problem? PC makers need something to keep Apple from taking over the computing world, and ultrabooks have become the go-to answer. Therein lies the problem. Ultrabooks may very well fill a hole for vendors, but they don't solve a problem the MacBook Air hasn't already addressed in some way.

Do you agree? Disagree? Either way, if you're a tech investor it makes sense to be studying the implications of the post-PC world emerging around us. The Motley Fool recently identified a handful of potential winners in a report titled "3 Hidden Winners of the iPhone, iPad, and Android Revolution." Thousands have already requested the report, which is available for a limited time. Get your copy before this offer expires -- the research is 100% free.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He owned shares of Apple at the time of publication. Check out Tim's Web home, portfolio holdings, and Foolish writings, or connect with him on Google+ or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Motley Fool owns shares of Intel, Apple, and Amazon.com. Motley Fool newsletter services have recommended buying shares of Amazon.com, Apple, Intel, and Cypress Semiconductor, writing covered calls in Dell, and creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (17) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 29, 2012, at 8:15 PM, bsimpsen wrote:

    Ultrabooks don't solve the problem of not having Mac OS, nor the problem of not having the aspirational brand logo glowing gently on the lid.

    And then there is the problem of Apple not sitting still. The iPad will shortly sport more pixels than any upcoming Ultrabook and, if Apple introduces an A6 powered Air at substantially lower price, all the oxygen will once again be sucked out of the room.

  • Report this Comment On January 29, 2012, at 8:44 PM, bbrriilliiaanntt wrote:

    Ultra books show desperation buy pc companies, and consumers smell it. They need to look at the next revolution, but are handcuffed to msft and spec worship.

  • Report this Comment On January 29, 2012, at 9:53 PM, tkell31 wrote:

    Yeah, it seems pretty weak. I doubt it will do more then speed up the demise of the PC which at best means revenue will stay even. I suppose emerging markets might support an increased demand for PCs and Ultrabooks especially since they don't have any reason to pick Apple (other than performance of course) over a cheaper alternative. On the other hand if Apple's slave labor issue comes back to haunt it they could be in for real problems as their margins take a hit.

  • Report this Comment On January 29, 2012, at 10:23 PM, ralphie345 wrote:

    Seems like a blatant attempt to pump up the author's Apple stock. Also, I'm always amazed by 'experts' who consider consumer electronics (i.e. Apple products) as being equal to 'the computing world' or even computing hardware. It's a big world, and Apple is only a small part of it.

  • Report this Comment On January 29, 2012, at 10:44 PM, FreeRange1 wrote:

    @ralphie345 - you are tooooo funny - to even suggest that Apple products are not in the "computing world". I wonder why they are doing extremely well in the business world then - Macs, iPhones and iPads no less????

  • Report this Comment On January 29, 2012, at 10:56 PM, techy46 wrote:

    Umm, Apple's MAC has Intel inside? Intel's just briding the time being until Windows 8 ships and there's tablets galour but with really cheesy processors like Atoms ans Snapdragons. Consumers don't really need anything but a smart phone with a 7-10" for viewing fbook and related porn. Consumers are driving their jobs overseas and desire to eat rice paddies.

  • Report this Comment On January 29, 2012, at 11:18 PM, Klippenstein wrote:

    Its not really that complicated. The ultrabook is the answer to Apple's laziness (and greed) by not integrating what logically should be one device: iPad and Mac book (Air if you like). An ultrabook with Windows 8 will answer the question. Secure, smart people will realize having an integrated touch screen/PC device in an ultrathin/light (if you will) for $700 is smarter than dragging two devices that need syncing and cost you more than twice as much. It's inevitable that not only android tablet sales will drop, but so will Apple iPads unless Apple copies Microsoft's integration. I doubt they can. In one year we will know if I am right about this.

  • Report this Comment On January 29, 2012, at 11:26 PM, Turloby wrote:

    With Intel paying massive subsidies to the Ultrabook makers, they are guaranteed a profit as well as the ability to underprice the Macbook Air.

    This sort of price distortion is going to make Apple Sauce out of the Macbook Air. Nobody is paying Apple to profitably lower their price on the Air.

  • Report this Comment On January 30, 2012, at 12:02 AM, TEBuddy wrote:

    Umm, is this just an Apple hype article? My GF and I both have ultra-thin notebooks with AMD processors and graphics. They are extremely convenient. Sure, they do the same thing as a Macbook Air, but who cares, they cost us 1/3 to 1/4 of the price and didnt have to buy a dozen overpriced accessories with them either.

    There is a huge market for Ultra-thin notebooks or ultrabooks, basically better than useless older Atom netbooks (which were widely popular for a time).

    I dont understand this authors point, obviously just a biased observer playing up his brand of choice.

  • Report this Comment On January 30, 2012, at 3:35 AM, nontechie wrote:

    It's not an A6 Air that I crave but an i5 iPad. I have both a first gen iPad and a summer '11 Air because when I travel there are "Apps" I need to use that don't exist in the iPad world and run only on a full-fledged Intel machine. If somebody (Apple) would make a touch-screen tablet that runs all standard software for the MacOS AND serves as an ebook reader too, I'd buy it lickety-split.

    Meanwhile, why do people want ultra-books? Because they are small and highly portable and run the software people need to run (which existing tablets won't) without bigger, heavier hardware.

  • Report this Comment On January 30, 2012, at 8:40 AM, marv08 wrote:

    @Klippenstein: No need to wait for one year. You are wrong. Now.

    A tablet and a laptop are two district devices – and will be for many years to come. Win 8 "convertibles" will either be like PCs (with Intel CPUs, low battery life, fans, bulk, weight and everything), or run on ARM CPUs, thus not run legacy Windows apps, and just be a tablet, for which Apple has 150,000 apps, Google a few hundred, and MS pretty much none. For conventional PC users 8 will be a downgrade (just look at the Explorer in the pre-Beta, yuck), the Metro interface does somehow work on a phone, it already falls apart on a tablet, and it is simply disgusting on a PC, or even the latest Xbox update - Frankendesign.

    ===

    Intel started that Ultrabook thing to sell more high end CPUs, and depend less on Apple for high margin sales. They have overlooked that people chose Windows PCs for the price. People who spent $700 for a fast 17" HP laptop before will not spend $1000 on a 13" machine that is slower, has less storage, etc. And the netbook buyers, well, their price limit was obviously in the $400 area – just calling netbooks Ultrabook will more than double their budget? Won't happen.

    If I want something without Intel and MS stickers, without OEM induced junkware and trialware, and do not want to be greeted by dozens of nonsensical pop-ups and bubbles on every start-up... My choice is still limited to the MacBook Air.

  • Report this Comment On January 30, 2012, at 8:53 AM, Colin1497a wrote:

    The ultraportable (thin/light) segment has existed since long before the first Macbook Air. I got my first sub-3lb notebook (a Toshiba) several years before the first Air came out. The thing was, it was just us business travelers who bought them.

    The Air caught on with consumers and Intel is trying to capitalize on a consumer segment that nobody knew existed (Apple included when they created the first Air). These laptops have higher margins than the bottom of the barrel stuff most consumers are buying, so of course the manufacturers and Intel want to push consumers that direction.

  • Report this Comment On January 30, 2012, at 9:26 AM, TMFMileHigh wrote:

    @TEBuddy,

    >>Sure, they do the same thing as a Macbook Air, but who cares, they cost us 1/3 to 1/4 of the price and didnt have to buy a dozen overpriced accessories with them either.

    You're not talking about Ultrabooks. You're talking about lower-function netbooks.

    Ultrabooks may very well come down in price but right now they sell at a premium:

    http://www.eweek.com/c/a/Mobile-and-Wireless/Ultrabooks-Pois...

    Thanks for writing and Foolish bet,

    Tim

    --

    Tim Beyers

    TMFMileHigh, Motley Fool Rule Breakers Analyst

    Web: http://timbeyers.me

  • Report this Comment On January 30, 2012, at 11:35 AM, speaksup wrote:

    I see it quite differently and wrote the following articles on Ultrabooks /Ultrathins

    -

    2 Trends Stand Out: 2012 Laptops / Ultrabooks / Notebooks

    http://blog.parts-people.com/2012/01/18/2-trends-stand-out-2...

    -

    Ultrabooks & Ultrathins: The Incoming Tidal-Wave

    http://blog.parts-people.com/2011/12/22/ultrabooks-ultrathin...

    -

    Ultrathin Ultrabook Security, Connectivity Drive Business Sales

    http://blog.parts-people.com/2012/01/03/ultrathin-ultrabook-...

    -

    Author's Bio

    http://blog.parts-people.com/authors-contributors/

  • Report this Comment On January 30, 2012, at 12:49 PM, tweenthelines wrote:

    2 months ago I bought an ASUS 15 inch netbook for $299 w/ 2g ram, Nvidia graphics. My cost/benefit and ROE is outstanding and I have a great chicklet keyboard. Am I missing something? I don't think so.

  • Report this Comment On January 30, 2012, at 10:53 PM, lanceim59 wrote:

    If you want to compare Intel vs Apple, I rather have 1700 Intel stocks than 100 Apple stocks any day.

  • Report this Comment On January 31, 2012, at 12:00 AM, TheDumbMoney wrote:

    An Ultrabook is approximately 13%-14% cheaper than an equivalent MacBook Air on Amazon.

    Compare

    http://www.amazon.com/Apple-MacBook-MC965LL-13-3-Inch-VERSIO...

    with

    http://www.amazon.com/Zenbook-UX31E-DH52-13-3-Inch-Ultrabook...

    For my money, at those prices, I'd rather get the MacBook Air.

    This HP Folio 13 can be had for around $700 though (on sale), and is also equivalent, except with a longer batter life....

    http://www.techbargains.com/news_displayItem.cfm/278439

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