Earlier this month, chip giant Intel (NASDAQ:INTC) announced a new set of processors and platforms targeted at high-performance laptops and desktop computers. Intel releases new computer processors on roughly an annual clip to help maintain its average selling prices (as older products naturally see price declines over time), as well as to give customers as many reasons as possible to buy new computers.
Considering that roughly 54% of Intel's revenue in 2017 came from the sale of processors and other related components in personal computers, Intel has quite the vested interest in driving demand for those computers.
One way that Intel hopes to boost its revenue from the personal computer market -- even as overall industry unit shipments continue to trend down -- is to try to increase how much revenue it generates from each computer sold.
There are a number of ways that Intel tries to do this. The company's latest move is to try to encourage people to buy computers packing its Optane memory technology -- a fast type of memory that can be used to accelerate the storage performance and therefore responsiveness of a computer -- through clever branding.
Tacking on a plus
Intel sells processors under its Core brand, and within the Core brand are sub-brands: Core i3, Core i5, Core i7, and Core i9. The purpose of this relatively easy-to-understand branding scheme is to let customers know how powerful the computer they're buying is.
A Core i9-based computer, for example, is easily understood by the average consumer to be more powerful than a Core i7-based computer.
What Intel is doing with its latest crop of processors is offering plus versions of its Core brands -- think Core i3+, Core i5+, and so on. The plus in this case doesn't mean a better chip -- since the chips themselves are identical to their counterparts in systems without the Plus branding. Instead, it signifies that a computer comes with Intel's Optane memory.
The idea here is that the Optane memory accelerates the performance of the system, getting the most out of the chip inside. The marketing might be a little gimmicky, but since the Optane memory should translate into a measurable improvement in computer responsiveness for a given level of processing power inside, I don't think it's dishonest.
How this helps Intel
Most consumers aren't going to know (or, frankly, care) about the intricate technical details of what separates, say, a computer with a Core i5 and a computer with a so-called Core i5+. What they'll probably surmise -- and what salespeople are likely going to be trained to inform customers who are interested -- is that computers with the plus branding are better in some way than the ones without the branding.
Customers who care about the performance and longevity of their devices might be encouraged, then, to shell out extra money for computers with the plus-branded chips.
This means more revenue for everyone involved -- retailers and computer makers by virtue of the higher system prices, and Intel by virtue of the fact that it's selling a reasonably pricey Optane solid state drive and processor (and possibly other components like Wi-Fi chips).
For some perspective, Intel's Optane memory comes in sizes of 16GB and 32GB, and those products sell for around $38 and $63, respectively. Intel probably sells Optane memory to large computer makers for a discount, but even if Intel is able to generate, say, an extra $20-$30 per system with Optane memory installed (this would imply roughly 50% discounts for system vendors who buy in bulk -- an estimate that's probably on the high side), then that could make a significant difference to Intel's top and bottom lines.