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That is exactly what I stated. Seamicro did not choose Intel over AMD for no reasons. Customers demanded that performance and reliability that AMD could not deliver.
Analysts have no clue. Seamicro used only Intel processors to sell its servers. Why? Because it determined that Intel processors were best for the products it was selling. Its customers bought those products knowing that fact. How AMD will justify selling Seamicro servers using its own chips. This is not going to fly. Secondly, as pointed out by others that how do you compete with your own customers. Thirdly, Intel will not share future roadmap to AMD/Seamicro. Sure AMD can buy as many Atomm it needs.
Chipguy clearly stated that AMD is throwing away $300M+. It is poor use of cash but AMD has no other choice.
Intel is going to loose money in this transaction. see below.
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* Buy to help gain from fast-growing NAND demand
* To buy stake in Singapore, Virginia memory plants
* Micron to supply flash memory to Intel
* Micron shares up 7 pct
(Adds background, details; updates shares)
By Himank Sharma
Feb 28 (Reuters) - Micron Technology will pay $600 million to buy back Intel Corp's stake in two wafer factories as the chipmaker bets on the fast-growing NAND flash market to offset margin erosion in its mainstay memory chips.
NAND memory, used in portable storage devices such as USB drives and smartphones, are fast replacing hard drives in notebooks -- such as the super-thin Ultrabook laptops that Intel promotes.
Intel had invested in the JV in 2006 to spur growth in the then-emerging technology. NAND has since gained prominence as computing power shifts to smartphones and tablets.
As part of the agreement, Micron, the largest U.S.-based maker of computer memory chips, will continue to supply NAND chips to Intel.
"Micron is going to get as much as a 30 percent more capacity from the deal and they would now be able to sell a significant portion of this back to Intel at an incremental profit," Raymond James analyst Hans Mosesmann told Reuters.
Intel pays Micron almost $1 billion annually for flash memory. The deal is expected to give Micron better margins on at least half of these sales, without increasing supply.
Wells Fargo analyst David Wong said in a note that it made sense for Intel to enter into the initial joint venture to drive growth of NAND supply, and it is now an appropriate time to exit given Micron's lead in investing in the venture.
Micron got about 40 percent of its revenue from DRAM chips -- used as primary memory in PCs -- in the last fiscal but oversupply has dented margins. Top DRAM maker Elpida Memory filed for bankruptcy on Monday.
Analysts expect Micron to buy some of Elpida's NAND factories.
CHEAP BUY
Intel and Micron formed the joint venture, IM Flash Technologies, investing $1.2 billion each in cash, notes and assets.
As part of the sale, Intel will get half of the $600 million in cash while the rest will be deposited with Micron, to be refunded or adjusted against Intel's future purchases.
"It's a great deal for Micron, they're getting it for the cheap," Raymond James' Mosesmann said.
According to Intel's latest annual filing, the carrying value of its stake in the JV stood at $1.3 billion as of Dec. 31.
On Tuesday, the companies said Intel sold the stake at about their book value.
"Intel might take a charge of as much as $700 million for this transaction," Wells Fargo's Wong said.
The transaction is expected to close during the first half of this year, subject to certain conditions, the companies said.
Boise, Idaho-based Micron will buy Intel's stake in their Manassas, Virginia, and Singapore factories.
The $3 billion Singapore facility, capable of making almost half of the JV's capacity of flash memory, started production last April.
The JV's third manufacturing facility in Utah will continue to operate with minimal changes, the two companies said in a statement.
Micron shares jumped 7 percent to $9.16, and were trading at $9.02 in afternoon trade on the Nasdaq. The stock gained 7 percent on Monday after Elpida's bankruptcy filing.
Intel shares were up 1 percent at $27.27.
(Reporting by Himank Sharma in Bangalore and Nicola Leske in New York; Editing by Unnikrishnan Nair) ((Himank.Sharma@thomsonreuters.com; Within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging: Himank.Sharma@thomsonreuters.com@reuters.net))
Keywords: INTEL MICRON/
For Reuters Top News page click the following link:
http://activetrader.schwab.com/ReutersNewsRedirect.aspx?vAnUSHeRl3nny5haw=781hmnBHYajoIt8wxH120PgtYuUecBLHG0818
Intel: UBS Sees Promise in $700 Ultrabooks
By Tiernan Ray
TAGS
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UBS Securities’s Uche Orji issued a note to clients Monday pondering whether Intel (INTC) can achieve a target for “ultrabook” laptops to make up 40% of consumer notebook sales by the end of this year. Yes, such a goal is achievable, writes Orji, who has a Buy rating on Intel shares and a $34 price target. His view assumes the emergence of a “value” ultrabook segment this year, which would drop in price about 20% from the lowest tier of ultrabook pricing at the moment, on average, going from $860 at present to just under $700. A big chunk of that will be a drop in the cost of the processor itself, based on the greater economics of Intel’s forthcoming “Ivy Bridge” chip:
Other than large capacity Solid State Drives (SSD), the processor is the single most expensive component in the Ultrabook BOM, ranging from approx $130 to $225 in high volumes to manufacturers. Even at $130, this is approx more than double the $60 ASP we estimate for Pentium dual-core mobile processors that are common in sub-$500 ASP notebooks. Although AMD will be introducing products from its new Trinity accelerated processing units (APU) family that could compete directly with Intel’s Core family, we believe Intel’s processor technology lead and microarchitecture give it better power efficiency traits. Hence, we do not expect a significant amount of price declines from the processor BOM as follow on Ivy Bridge 22nm mobile processors are anticipated to have approx flat to moderately lower ASPs compared to Sandy Bridge when they arrive in mid-2012. Further, Ivy Bridge could include low-cost offerings that may be marketed under the Core i3 family.
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http://blogs.barrons.com/techtraderdaily/2012/02/27/intel-ubs-sees-promise-in-700-ultrabooks/?mod=BOLBlog
I understand that. But Intel has been managing expectations very well on process changes. I am sure Wells Fargo analyst based his rationale on hearing from Intel other you are correct that it can backfire.
Feb 24, 2012
4:13 PM
Intel: Wells Sees Gross Margin Increase on 22-Nano Parts
By Tiernan Ray
Wells Fargo chip analyst David Wong this afternoon reiterated an Outperform rating on shares of Intel (INTC), writing that the company’s gross margin is poised to rebound from 62.5% in 2011 to 64% this year, leading to higher operating profit as well, all else being equal.
Wong sees a rebound in revenue growth as personal computer growth returns from a depressed state prompted by disk drive shortages resulting from floods that besieged Thailand last year.
That revenue recovery will help Intel take advantage, he suggests, of favorable economics in the manufacture of its 22-nanometer chips this year:
In 2011 there was a need for more capacity of 32nm silicon. Our numbers show that Intel’s 22nm families may well have an average die size that is less than the 32nm Sandy Bridge, though significantly greater than the 32nm Westmere processor chip. On balance we conclude that the effect of die size is probably neutral with regard to 22nm capacity need compared to the 32nm node. If there is nothing intrinsically more costly about 22nm manufacturing than 32nm manufacturing, the unit processor cost of Ivy Bridge could be lower than Sandy Bridge. Hence higher capital spending in 2012 should not affect gross margin.
Intel shares today closed up 4 cents at $26.70.
http://blogs.barrons.com/techtraderdaily/2012/02/24/intel-wells-sees-gross-margin-increase-on-22-nano-parts/
Agreed. But to have them both on same die is a problem for manufacturing as digital and analog designs have different design rules. As I understood, Intel is trying to put both of these on same die using design rules of digital.
I don't know personally enough of semiconductor process. I am basing my opinion based on what I have read.
David,
RF and CPU manufacturing are two different beast. No one has been shipping these two on the same die. The article makes it very clear. Leakage between the two is a big issue.
I think the %age are being looked in wrong perspective. Black Rock is an asset based company. Its market value based on stock price and outstanding shares comes to $35B. But its asset are much more than. Intel investment is an asset on its book. I have attached its last quarter earnings report to make this point.
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UPDATE 4-BlackRock posts lower net, but draws inflows
11:52 am ET 01/19/2012 - Reuters
* Adjusted EPS $3.06 beats estimates
* AUM down 1 pct to $3.51 trillion
* Rare inflow of new cash from investors (Recasts to add context, comments from conference call, share price)
By Ross Kerber
Jan 19 (Reuters) - BlackRock Inc, the world's largest money manager by assets, said fourth-quarter net income fell 16 percent on lower fees. But the company still managed to draw new investor cash with a wide range of products.
As volatile markets drive investors away from traditional equity funds, the inflows seemed to validate BlackRock's focus on products like exchange-traded funds and institutional index funds.
Shares in BlackRock were down 1.3 percent in morning trading, at $185.40. One reason for the fall was a decline in the pipeline of new business of $54.3 billion at Jan. 12. That was down from figures BlackRock reported at the end of previous quarters -- $65.2 billion at Oct 17 and $84.3 billion at July 14.
But overall, the results showed how BlackRock has managed the movement of investors away from active products. "They have the full range of capabilities. If money goes out of one product it goes into another, and they have both sides of that," said Stifel Nicolaus analyst Jeffrey Hopson in an interview.
Hopson and several other analysts said they were satisfied with the company's results overall. Nomura analyst Glenn Schorr said in a note to investors that the inflows gave the company "a solid 3.1 percent organic growth rate in a very tough backdrop."
EARNINGS BEAT
BlackRock's net income fell to $555 million, or $3.05 per share, from $657 million, or $3.35 per share, a year earlier. Adjusted for taxes, restructuring and other items, earnings were $3.06 per share. On that basis, analysts on average had expected $2.99, according to Thomson Reuters I/B/E/S.
Assets under management at Dec. 31 were $3.51 trillion, down from $3.56 trillion a year earlier but up from $3.35 trillion at the end of the third quarter.
The increase reflected a $143.3 billion improvement in market and investment performance as stock indexes rose in the quarter, and an inflow of $23.8 billion of new investor cash to long-term products like equity and bond funds, particularly index products. BlackRock's iShares ETF business had an inflow of $20.1 billion in the quarter.
The inflows stood out at a time when specialists expect other, smaller asset managers to report net outflows of cash with their earnings next week.
On a conference call with investors, which was webcast, BlackRock Chief Executive Laurence Fink said the results reflected his company's range of products. "The diversity of our business model has substantially dampened the impact of volatile markets," he said.
Fink also said risk-averse customers will pressure many asset managers to lower fees. "There is going to have to be some form of reckoning in the mutual fund industry," he said.
NO BIG DEALS
Fink said BlackRock is considering smaller acquisitions but it is not going to make any large-scale deals, as he has heard rumored.
BlackRock said it had taken a $32 million restructuring charge for a 3 percent cut in its workforce in the quarter. It had about 10,100 employees as of Dec. 31, roughly 900 more than a year earlier.
Revenue fell 11 percent to $2.2 billion, reflecting lower fees from investment advisory work and administration fees because of the lower assets under management.
Also contributing to the revenue decline was a fall-off in performance fees by more than half, to $147 million in the fourth quarter, mainly because of lower performance fees on hedge funds.
Jefferies & Co analyst Dan Fannon said in a note to investors that he had expected an even sharper drop in performance fees, to $75 million. The difference was a major reason for the earnings beat, he said.
GPU on IB and Haswell has started getting attention. It could be disruptive to AMD and Nvidia.
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NVDA: Sterne Agee Sees Lack of ‘Tegra’ Catalysts, GPU Risks
By Tiernan Ray
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Sterne Agee’s Vijay Rakesh today removed shares of Nvidia (NVDA) from the firm’s “Catalyst Driven Idea List” because the 17% rise in the stock price in the last month is above his target of $16, and because the outlook the company offers on February 15th, the date for its fiscal Q4 report, will likely be “soft” as a result of “no material Tegra 2, 3 ramps near term,” referring to the company’s application processor for phones and tablets, and given weakness in PC sales.
Rakesh sees some more action coming around the time of Mobile World Congress, in Barcelona, at the end of the month:
While there were some catalysts at CES with the quad-core Tegra 3 integrating Touch on its “Ninja” 5th core, CES also saw a Win8 Tablet prototype running an NVDA Tegra. While we believe there could be more catalysts with MWC February 27, we believe NVDA shares are fairly valued here. MWC catalysts could include Tegra 3 handsets with Icera baseband and some 7”-10” tablets running Android Ice Cream Sandwich.
But he also sees increased competition in the GPU market from Advanced Micro Devices (AMD) and Intel (INTC):
With AMD ramping 28-nm Radeon HD7970 which delivers 5-30% better graphics performance than competitor GPUs on the market, paired with integrated APU Llano and INTC’s Ivy Bridge-Haswell, we continue to believe the core discrete GPU market could have some structural challenges.
The following news has comments from Oracle that it is pleased with verdict. strange twist of facts.
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Hewlett-Packard Defeats Oracle’s Claim It Was Duped Into Hurd Settlement
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By Joel Rosenblatt - Jan 30, 2012 9:01 PM PT
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Hewlett-Packard Co. (HPQ) won dismissal of Oracle Corp.’s claim that it was duped into settling a dispute over its hiring of HP’s former chief executive officer, Mark Hurd,.
Oracle alleged that HP fraudulently hid that it was planning to hire Leo Apotheker as CEO and board chairman Ray Lane, who were “toxic” to any partnership with Oracle, when it forged a settlement with Oracle over its hiring of Hurd. Oracle also claimed that HP concealed that it was secretly paying Intel Corp. (INTC) $88 million a year to “artificially continue” the Itanium chip’s lifespan.
A state judge in San Jose, California, said in a ruling yesterday day that HP’s alleged misrepresentations “did not prevent Oracle from participating in the negotiations” over the Hurd settlement “or deprive Oracle of the opportunity to negotiate.”
Judge James Kleinberg also rejected bids by both companies to seal documents in the case that they argued contain sensitive business information that that might harm them or their customers.
In June, HP, based in Palo Alto, California, sued Oracle over its decision, announced in March, to no longer support database software on HP computer servers that use the Itanium chip. The suit escalated tensions between the companies that flared after Oracle hired Hurd as a co-president.
‘Another Attempt’
HP said yesterday in an e-mailed statement that the fraud claim dismissed by the court “was another attempt by Oracle to get out of the contract it entered into with HP, wherein it continued to offer its product suite on HP’s server platform.”
Oracle said in an e-mailed statement that it’s pleased with the judge’s refusal to seal HP documents.
The court “has rejected HP’s attempt to hide the truth about Itanium’s certain end of life from its customers, partners and own employees,” Oracle said.
Deborah Hellinger, a spokeswoman for Redwood City, California-based Oracle, declined to comment on the dismissal of the fraud claim.
The case is Hewlett-Packard Co. v. Oracle Corp. (ORCL), 11- cv-203163, California Superior Court, Santa Clara County.
The list of things Oracle did to HP is very detailed and long. This is going to effect Oracle business particular its hardware business using Sparc will get a very big hit. It is very damaging in my opinion.
Here is some additional information.
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By Dan Levine
Jan 30 (Reuters) - A California judge has dismissed a fraud claim brought by Oracle Corp against Hewlett-Packard Co in the bitter legal battle between the two companies over the Itanium platform.
Last year, Oracle decided to discontinue its support for Itanium, a heavy-duty computing microprocessor, saying that Intel Corp made it clear that the chip was nearing the end of its life and that Intel was shifting its focus to its x86 microprocessor.
HP called Oracle's decision "anti-customer" and sued Oracle in California state court in June.
Oracle then brought several claims against HP, including one for fraud. Oracle accused HP of concealing facts during settlement talks to resolve litigation over former HP chief executive Mark Hurd's move to Oracle.
Specifically, Oracle said HP did not disclose that it was about to hire Leo Apotheker and chairman Ray Lane, who both have longstanding animosity with Oracle chief executive Larry Ellison. Had it done so, Oracle said, it never would have signed the Hurd settlement.
Apotheker has since been ousted as HP's chief executive.
In an order made public on Monday, Santa Clara County Superior Court Judge James Kleinberg dismissed Oracle's fraud claim.
"The alleged fraud did not prevent Oracle from participating in the negotiations or deprive Oracle of the opportunity to negotiate," Kleinberg wrote.
Oracle spokeswoman Deborah Hellinger declined to comment. In a statement, HP said it was pleased with the ruling.
The case in the Superior Court of the State of California, County of Santa Clara is Hewlett-Packard Company v. Oracle Corporation, No. 11-CV-203163.
This will make it difficult for Intel to break into Smartphones market unless its chip can create a difference in features etc.
It will gain market share as it has none by taking it away from ARM but it will not make a whole lot of difference to Apple.
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SAN FRANCISCO (MarketWatch) ? It is not such a surprise that Apple Inc. has done so well in this earnings go-round. The shocker is that others have done so poorly, particularly competitors including Nokia Corp. and Motorola Mobility Holdings Inc. I suppose I could throw Google Inc. into this list as well.
I have a few thoughts on the situation.
It appears that the iPhone market is a zero-sum game. This means if Apple AAPL?is killing it by becoming the No. 1 smartphone maker, then others must suffer. People generally do not buy an iPhone and a Lumia from Nokia NOK.
I see the iPad as less of a zero-sum game; it?s more of an outright monopoly. But the iPad could adversely affect the laptop market ? and if it isn?t hurting laptop sales, then the MacBook Air is.
A MacBook Air will take sales away from the competition, and this is further compounded by the iPad, which many are trying to use as a laptop replacement. This is made easier by all the keyboard add-ons for the tablet.
Such accessory keyboards are being shown at this week?s Macworld Expo in San Francisco. In fact, the event seems to have more accessories than anything else, and this in itself helps prop up Apple?s products.
Until the Apple platform?s cool and desirable qualities are beaten back by the competition, it will remain on top of the markets. This is the key.
There has yet to be a more prestigious smartphone than the iPhone. While there is a rivalry between Android and the iPhone, no one is clamoring for an Android phone; nobody waits in line for hours to buy the latest device.
Ironically, Apple is most vulnerable in the iPhone category. As long as it rules the zero-sum game, some other player can come along with a great marketing scheme and topple it. So far no one?s come close, but the opportunity is there.
Vendors have to take a page from the game-console business, and find some program or system that is so fantastic that people have to buy the platform so they can use it. (The front-facing camera is an example of something everyone can do.)
This sort of concept worked in the gaming world, when an exclusive title came out and users had to buy the console to play it. This was somewhat in effect during the early days of the Apple II, when accountants bought it just to use VisiCalc ? the original spreadsheet program.
The Android phone with its built-in Google GOOG?navigation program is reason enough to have the phone. I have seen nothing better, and it is free. Yet it?s not been the killer app needed to destroy the iPhone hegemony.
The fear among handset makers is that no killer app will emerge, and perhaps something like great battery life will help their cause.
Smartphones indeed are small computers, and that means there have to be compelling uses that will sell them. Yet there is really nothing anyone can do to make any smartphone exclusive, except for the killer app that only runs on one brand of phone. Everything else can usually be copied and incorporated into the next iPhone.
I do not know that any other handset makers are even trying to imagine a killer phone app that they can monopolize and make their device an object of desire by the fickle audience currently smitten by all things Apple. Until they rethink their marketing strategies, the Cupertino, Calif.-based company owns the business.
Yes, Apple could stumble along the way, but it hasn?t happened for years.
I am not sure I get some of these analysts. How come AMD had gained shares vs. Intel in server markets with BD. The only explanation is that its share was so low that any increase would be magnified. I guess we will have to wait till official market shares are released.
My apology to post AMD information on Intel thread.
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http://blogs.barrons.com/techtraderdaily/2012/01/25/amd-out-from-the-shadow-of-globalfoundries/
AMD: Out from the Shadow of GlobalFoundries?
Posted by Tiernan Ray
Shares of Advanced Micro Devices (AMD) are up 16 cents, or 2.5%, at $6.69 following the company’s report last night of better-than-expected Q4 earnings per share, and a Q1 revenue outlook slightly below expectations.
The highlight of the quarter from a financial standpoint was the improvement in gross profit margin, which rose by a percentage point, to 46%, from the prior quarter; analysts were also pleased that the company managed to keep operating expenses, including SG&A, and R&D, about the same as the prior quarter, and lower than the company had expected.
From a product standpoint, recently appointed CEO Rory Read said that the company’s server chip business had “re-gained momentum,” having had two quarters in a row of “strong sequential growth.”
Many analysts are waiting to hear more at the company’s analyst day briefing on February 2nd at the company’s Sunnyvale, California headquarters.
David Wong, Wells Fargo: Reiterates an Overweight rating and raises his “valuation range” from $6 to $7.50 to a new range of $8 to $10. “We think that AMD gained share in server processors in the December quarter. AMD’s commentary suggests to us that AMD’s sequential server revenue growth was better than 20% in the December quarter, with ASPs down sequentially, implying that server unit growth was well above 20%. This compares with Intel’s sequential data center revenue growth of 8% in the quarter [...] The expectation of a stable gross margin in March implies, we think, high likelihood of a satisfactory conclusion to the renegotiation of AMD’s wafer supply agreement with Globalfoundries.”
Hans Mosesmann, Raymond James: Reiterates an Outperform rating and a $7 price target. Matching Intel‘s (INTC) outlook for an 8% sales decline this quarter was “not bad at all in our book for a company that has been struggling with 32-nanometer yields that have restricted availability of perhaps one of the hottest processor products in the market, the Llano APU.” Mosesmann thinks “yield issues are now resolved” and he’s looking forward to a “quick transition to the newer Trinity APU that should enable ultrathin form factors with performance of mainstream notebooks and $600 price points.”
Craig Berger, FBR Capital Markets: Reiterates an Outperform rating and a $10 price target. Despite the disappointing revenue miss last quarter, “management did well in other metrics such as gross margins, operating expenses, and improving 32nm Llano supply,” writes Berger. “Further, AMD’s GPU shipments fell 5% QOQ, likely better than NVIDIA’s GPU shipments (which likely fell more than 10% in 4Q11). Berger expects investors “will positively receive management’s refined strategy and additional business detail” at analyst Day. “Stepping back, we like shares of AMD, especially below $7, and think the stock trades very inexpensively on various metrics, and with still-negative investor sentiment.”
Stacy Rasgon, Sanford Bernstein: Reiterates a Market Perform rating, while raising his price target to $6.50 from $5.50. Rasgon wonders if the cloud of AMD’s foundry partner, GlobalFoundries, may finally be lifting. He notes the 85% increases in shipments Llano, and the surge in server chip revenue. “Management commentary indicated GlobalFoundries’ recent practice of cannibalizing their 45nm capacity to serve 32nm needs would be ended in Q1. Finally, management indicated that they believed overall 32nm supply constraints in Q1 would ease (although we note that, given guidance, demand is likely to be lower in Q1 as well). – This is a critical piece of the AMD puzzle. As we have written extensively, AMD’s products should contain significant upside if they can get enough of them out the door. Poor yields at GlobalFoundries have wreaked havoc with this thesis in recent quarters; and a realization of yields more appropriate to high volume manufacturing would be a great boon.”
JoAnne Feeney, Longbow Research: Reiterates a Neutral rating, with no price target, but calls the report “solid,” and says it looks like the company is gaining share. “Our analysis in Monday’s preview showed that AMD would need to gain share in 1Q in order to give the same Q/Q revenue guidance as Intel; guidance points to ~110bp in PC processors or a similar mix of PC and server share gains. We think it likely, given our recent checks, that AMD will continue to gain traction in Bulldozer server CPU share in 1Q and we also see further share gains coming in notebook (Llano) as AMD finally supplies product to meet that pent-up demand.”
Others remain highly skeptical of the business model overall:
Romit Shah, Nomura Equity Research: Reiterates a Neutral rating and a $5 price target. “AMD is making strides to improve manufacturing yields, but at the same time is falling further behind Intel, which will begin ramping 22nm Ivy Bridge this spring.” Despite improved 32-nanometer yields, “we expect the company to continue to be supply constrained for the next few qtrs and may see increased price erosion as Intel ramps 22nm parts in the spring.”
Christopher Caso, Susquehanna Financial Group: Reiterates a Neutral rating and a $5.50 price target. He prefers to hear more at the analyst day before making a judgement one way or the other, he writes.
Jonathan Pitzer, Credit Suisse: Reiterates a Neutral rating and a $7 price target. The company is “stuck in limbo,” he believes. “The set-up for AMD is appealing, but has been for over 12 months – near historic low share in Server but perhaps gaining traction, better cost structure in client with improving 32nm yields, and a continued strong position in core graphics. We want to become more constructive but remain on the side lines as leverage benefits (share, GM, and balance sheet deleveraging) seem to be equally matched by (1) spotty historic execution with Trinity launch expected mid-year at TSMC, (2) potential limited incremental Server gains as Romley launches, (3) potential for a hybrid x86/ARM strategy driving incremental investment and (4) core graphics market in question around APU/Integrated and profitability which declined 66% y/y in 2011.”
Daniel Berenbaum, MKM Partners: Reiterates a Sell rating and a $4 price target. There is still a fundamental structural problem with AMD, he thinks, namely being”squeezed from above by INTC and from below by ARM-based competition.” He notes gross margin and operating expense control were “bright spots.”
It will never happen. Intel is component supplier of first class. That is what they do extremely good. To compete with top Smartphone makers will be a mistake till all other options are exhausted. Apple, Samsung, HTC, LG, RIM, Motorola are very well established players.
No one can touch Intel in manufacturing process and no one will ever understand the value of that power. And it is easy to understand that especially for these analysts who come from for most part from business background. It is very difficult for them to monetize the process advantage.
Stacy Smith on Bloomberg. GM will stay high in the range of 60%+ even with Smartphone business. That is truly amazing.
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http://www.bloomberg.com/video/84561718/
Some of these analysts have no clue. Ink had not dried on CES, here comes various negative opinions. 65 designs by various OEMs speak volume for this class of computers.
Knowing Intel, I am not too much concerned about that. Ultrabooks from other OEMS will outnumber what Intel sells to Apple.
Analysts change their mind with every breath. 65 Ultrabooks designs is not a small number.
That is what I stated. That what makes the market. One bets one way and the rest bets in opposite direction.
Intel potentially could loose Mac air if some of the rumors in the past do become true of Apple using A6 or future variant of its own developed chips.
Yes Intel wins with Mac air but not that much. It will win hands down when other OEMs succeed.
Ultrabooks are supposed to replace Tablets or slow down the tablets from other OEMs.
CES 2012 just ended and negative news about Ultrabooks are already here. Based on majority of reviews, Ultrabooks were impressive but not to this analyst. I guess that what makes the market.
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11:09 AM
Apple: Canaccord Sees Ultrabooks Struggling Against Next ‘Air’
Posted by Tiernan Ray
Canaccord Genuity’s Mike Walkley this morning writes that Apple’s (AAPL) “shadow” loomed over last week’s Consumer Electronics Show in Las Vegas, as various smartphones based on the “LTE” standard of 4G networking, as well as “ultrabook” laptops, all seemed “targeted to compete with Apple’s strong product portfolio.
That’s a preamble to Walkley’s declaring 2012 a “strong” year based on his expectations for a MacBook Air refresh, probably with a 15-inch screen; an “iPad 3” this spring; an iPhone with LTE connections “by mid-year,” he thinks; and possibly an “Apple TV” as the year ends.
Of ultrabooks, he thinks they’ll struggle:
While Ultrabooks grabbed many of the headlines at CES, we view Ultrabooks as a Windows alternative to MacBook Air. We believe Apple will continue to gain PC market share by launching a refreshed MacBook Air line in the coming weeks […] Further, we believe Ultrabooks at proposed $700- $900 prices will struggle to sell versus competitively priced new MacBook products, as we believe Apple will continue to benefit from its supply chain advantages such as dominant share of the global NAND flash market given growing volumes for iPhones and iPads.
Walkley maintains a Buy rating on Apple shares and a $560 price target.
Despite the disappointment of many pundits regarding the iPhone 4S’s evolutionary hardware design, our checks indicate global sales have exceeded expectations. We believe global demand for a fully redesigned iPhone 5 in mid-C2012 – which should include LTE for U.S. carriers, TD-SCDMA for China Mobile, and a larger screen and new form factor for all global models – should lead to stronger sales than the remarkable 4S sales. In fact, we believe iPhone 5 will serve to catalyze LTE smartphone sales at U.S. carriers including Verizon, AT&T, and Sprint, and we believe a TD-SCDMA iPhone 5 could sell roughly 30M units at China Mobile in its first year at the world’s largest carrier.
http://blogs.barrons.com/techtraderdaily/2012/01/17/apple-canaccord-sees-ultrabooks-struggling-against-next-air/?mod=BOLBlog
No one at the moment but the article stated that ipad3 will use quadcore.
Ass I recall it will use quad core processor. So it must be A6 and not higher clocked version of A5.
In any case, Intel is going for Smartphone and not ipad clone at the moment. It believes that ultrabooks will take care of the ipad in long run.
This will be hard for Intel to match in short run. Dual core medfield will be needed to compete against this ipad3.
IPad 3 Said to Have High-Def Screen, LTE
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By Tim Culpan, Peter Burrows and Adam Satariano - Jan 13, 2012 4:44 PM PT
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Apple's next iPad will sport a high-definition screen, run a faster processor and work with next-generation wireless networks. Photographer: Scott Eells/Bloomberg
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Jan. 13 (Bloomberg) -- Paul Kedrosky, author of the Infectious Greed blog and a Bloomberg contributing editor, talks about Apple Inc.'s move to disclose its suppliers and the company's earnings outlook. Kedrosky, speaking with Jon Erlichman on Bloomberg Television's "Bloomberg West," also discusses News Corp. Chairman Rupert Murdoch’s Twitter account. (Source: Bloomberg)
Apple Inc. (AAPL)’s next iPad, expected to go on sale in March, will sport a high-definition screen, run a faster processor and work with next-generation wireless networks, according to three people familiar with the product.
The company’s manufacturing partners in Asia started ramping up production of the iPad 3 this month and plan to reach full volumes by February, said one of the people, who asked not to be named because the details aren’t public. The tablet will use a quad-core chip, an enhancement that lets users jump more quickly between applications, two of the people said.
Chief Executive Officer Tim Cook is counting on the new model to ward off mounting competition in a market that Apple pioneered two years ago. After its debut in 2010, the iPad emerged as the company’s second-biggest source of revenue -- after the iPhone -- and inspired rival products from Amazon.com Inc. (AMZN) and Samsung (005930) Electronics Co. Apple has sold more than 40 million iPads, generating at least $25.3 billion in sales.
Natalie Kerris, a spokeswoman for Apple, said the company doesn’t comment on rumor and speculation.
The Cupertino, California-based company has been working on making the iPad compatible with a wireless standard called long- term evolution, or LTE, said one of the people. Carriers such as Verizon Wireless (VZ) and ATT Inc. (T) are rolling out LTE networks to give users faster access to data.
LTE Networks
Smartphone makers, including Samsung, Motorola Mobility Holdings Inc. (MMI) and Nokia Oyj (NOKIA), have already introduced smartphones that work on the faster networks. Apple is bringing LTE to the iPad before the iPhone because the tablet has a bigger battery and can better support the power requirements of the newer technology, said one of the people.
The new display is capable of greater resolution than the current iPad, with more pixels on its screen than some high- definition televisions, the person said. The pixels are small enough to make the images look like printed material, according to the person. Videos begin playing almost instantly because of the additional graphics processing, the person said.
The new iPad is being assembled by Apple’s main manufacturing partner, Foxconn Technology Group. Like most technology companies, Apple contracts with companies in Asia for labor to assemble its devices. Foxconn, which also builds the iPhone and other Apple products, gets about 22 percent of its sales from Apple, according to supply-chain data compiled by Bloomberg.
Boosting Production
Mass production began at the start of this month, with factories running 24 hours a day in China, one of the people said. Manufacturing will halt over China’s Lunar New Year holiday this month and then ramp back up to a peak in February, the person said.
The introduction of the new iPad will be Apple’s first major hardware release since the death of company co-founder Steve Jobs in October. The company is hosting an education event focused on electronic textbooks next week that won’t include any hardware introductions, said a person familiar with the matter.
Apple, the world’s largest technology company by market value, was little changed yesterday in U.S. trading at $419.81. The stock rose 26 percent in 2011, marking its third straight year of gains.
http://www.bloomberg.com/news/2012-01-13/apple-said-to-prepare-march-ipad-3-debut-with-sharper-screen-faster-chip.html
I don't think this will happen till Intel advantage of process so overwhelming that Apple is forced to do so. Apple has PA semi to design its own chips. It has to deal with that as well.
Folks who short Intel stock will always be there. This is how market works. Intel stock had done well in 2011 and so far in 2012.
Just to clarify. I am not short Intel. I follow Elmer Strategy of writing calls and puts to maximize my gains.
Your link clearly states Intel advantages and disadvantages. I have cut and pasted the following:
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Longer term, Intel's process advantage could prove decisive. In 2013, Saltwell will be replaced by Silvermont, built on the company's 22 nm process. The 22 nm process will allow for substantial improvements in power consumption, frequency, or both. In 2014, the process shrinks again, to 14 nm. This is more aggressive than the path that TSMC, IBM, Globalfoundries, and Samsung plan to take, and from 2013 onwards, Intel could attain a sustained process advantage for its smartphone processors—an advantage that may prove all but insurmountable.
One possible difficulty for Intel may be matching ARM's flexibility and variety. With ARM, a smartphone manufacturer can design a custom SoC by picking and choosing which building blocks and features they want to support. Apple's A5, for example, is similar to other Cortex A9 SoCs, but the exact combination of features (GPU, memory, support for optional parts of the ARM instruction set) is unique to Apple. Intel's business is geared towards mass production of identical units, not shorter runs of customized designs. Matching these capabilities is not part of Intel's usual business model.
Still a lot of skepticism
SAN FRANCISCO (MarketWatch) ? At last year?s Consumer Electronics Show, Intel Corp. didn?t get much attention.
It lacked a presence in smartphones and among the Apple iPad AAPL?wanna-bes. Instead, the media and investors were focused on hotter devices developed around the more power-efficient chips with designs from ARM Holdings PLC ARMH. ARMHARMHARMHARMH
Intel INTC?was seen as missing the big boat in smartphones and tablets and its partnerships with LG Electronics Inc. LGEIY? and Nokia Corp. NOK appeared to be leading nowhere.
What a difference a year makes.
This week in Las Vegas, the chip giant showed the industry it?s not down for the count.
On Tuesday night, Intel Chief Executive Paul Otellini offered some hope with a dose of good news for investors, who have been fretting for the last two years about the company?s absence in one of the industry?s fastest growing gadgets: smartphones.
Still, the pacts with Motorola Mobility Holdings Inc. MMI?and Lenovo Group of China, which will use Intel?s next Atom processor in upcoming smartphones later this year, offered nothing concrete for investors. There were no revenue projections, estimates or precise launch dates. The news was more of a psychological boost. Investors on Wednesday were focused on Microsoft?s comments at CES about over-optimistic forecasts for PCs in the fourth quarter.
?Motorola and Lenovo together account for only [less than] 4% of the smartphone market,? said Stacy Rasgon, a Bernstein Research analyst, in a note Wednesday. ?Thus Intel is unlikely to see upside anytime soon.?
More buzz about Intel was coming from a slew of concrete products shown at the sprawling tech show, the new Ultrabooks, a term coined by the chip maker for a generation of lighter, sleeker notebooks that use its new mobile chips. The company touted its next generation chip family, code-named Ivy Bridge, and PC makers wowed attendees with some cool designs.
Some analysts had predicted Intel might garner a lot of attention at the show. In addition to the hoped-for news about a smartphone customer or two, a lot of the chatter ahead of the show compared Intel?s emphasis on Ultrabooks to the successful promotion of its Centrino WiFi technology several years ago.
Intel has worked closely with PC makers to help them create the thinner, more stylish chassis. Some of the sleek designs at CES that drew a lot of attention were the Hewlett-Packard Co. HPQ?Envy 14 Spectre, covered in a lot of Corning Inc.?s GLW?Gorilla Glass, which some analysts said might be priced too high, and Dell Inc. s DELL XPS 13 Ultrabook. (The H-P Spectre starts at $999.99 for a base configuration. Press reports from CES note that the configuration on display costs $1399, $100 more than the comparable 13-inch MacBook Air.)
The Apple camp will correctly point to ? and deride ? the industry?s mimickry of its MacBook Air in all of these designs. Like the MacBook Air, the thin and light Ultrabooks exclude the use of optical drives and hard disks.
Indeed, Salesforce.com Inc. CRM CEO Marc Benioff posted a link to Intel?s CES press conference on Facebook, in which he wrote, ?add these words to everything the Intel executive is saying: ?you can do this like an iPad,?? and many people joined in deriding the copycat efforts of the PC industry. ?
But the wave of these new skinnier yet powerful laptops represents the first spark of interesting products in PCs in a long time. Even the cynical Business Insider wrote that attendees were ?
?We walked out of the Intel?s press event yesterday wanting to own an Ultrabook,? wrote Nomura Securities analyst Romit Shah, in a note after the company?s press conference.
Whether all this excitement can spill over into sales remains to be seen. PC makers need to offer their products soon, to capitalize on the show?s momentum. Dell said its Ultrabook XPS 13 is coming next month. The H-P Spectre is also tentatively set for February.
Intel?s push into smartphones, with its lower-power consuming Medfield chip, which has been getting good chatter on Wall Street in recent weeks, will take longer to pan out. The first Intel-based smartphones from Lenovo in China won?t ship until the second quarter, and Motorola said the carriers will validate its designs in the summer, and will ship shortly after.
But this week, Intel kicked some desert sand back in the face of the powerful forces in mobile, and showed it is still Charles Atlas in PCs. But it now has to prove it is more than just a bully defending its turf and that it can move beyond the PC.
(C) 1997-2012 MarketWatch.com, Inc. All rights reserved. Please see our Terms of Use. MarketWatch, the MarketWatch logo, and BigCharts are registered trademarks of MarketWatch, Inc. http://custom.marketwatch.com/custom/docs/useragreement.asp
I might disagree with you here. Having seen Intel road map, it will be difficult for phone makers to ignore that fact. 28nm parts from other vendors may not be enough to stop Intel. Its 22nm parts are not that far away.
David,
This has been long in coming. Patience has its own rewards. It is just the beginning. With strong performance relative to other android phones, it will not be too long before other follow suits.
You should be happy. We all have been waiting for this time.
Thanks mas. In these 2 tests, Intel product beats all other android product.
I would not be surprised to see other players jumping on Intel band wagon.
Finally Intel broke the barrier. Hopefully it translates into higher stock prices.
I am glad you are not worried any more. They were unfounded.
Even the Intel phone shown has features others android phones on the market don't have.
LAS VEGAS, Jan. 10, 2012 /PRNewswire/ -- Baker & Taylor, Inc., the world's largest distributor of digital and physical books today announced an agreement with Intel, the world leader in computing innovation, to provide a comprehensive ebook solution for Ultrabook devices through Intel AppUp(SM) center.
(Logo: http://photos.prnewswire.com/prnh/20090529/CL24290LOGO)
"We are thrilled to be chosen by Intel to deliver its ebook platform, which will showcase popular and enhanced ebooks in an ultra-responsive, elegant way. Ultrabook devices are the next step in mobile computing for consumers, providing a portable, sleek device for readers to enjoy their favorite ebooks," said Bob Nelson, president of Baker & Taylor's Digital Group. "Through our agreement with Intel, we can deliver a versatile ereading experience and rich, interactive digital content on a truly innovative device."
Through its partnerships with thousands of publishers worldwide, Baker & Taylor will provide a fully merchandized bookstore that includes best-selling titles, as well as children's books, textbooks and lifestyle books, such as travel and cookbooks, many with integrated full-color, sound effects and multimedia. This bookstore will feature the Blio ereading application, developed by K-NFB Reading Technologies, founded by technology visionary Ray Kurzweil. Ultrabook users will have at their fingertips the content they want and the interactive features and functionality to more fully engage their ebooks.
"People are increasingly looking to one device to serve their content consumption and content productivity needs, and Ultrabook devices make that possible by providing the most complete and satisfying experience," said George Thangadurai, general manager of PC Client Services at Intel Corporation. "Baker & Taylor brings a comprehensive collection of ebooks to Ultrabooks and through the Blio ereading application, powered by Intel AppUp Center, provides a superior reading experience for visually rich content."
Ultrabooks, inspired by Intel, are a new category of laptop computers that are ultra responsive, ultra sleek and blend high performance, smart capabilities and portability. Ultrabook devices are perfect for consumers to engage ebooks, as they are equipped with superior screen resolution, high speed, large memory, and extended battery life.
About Baker & Taylor
Baker & Taylor, Inc. (www.baker-taylor.com) is the world's largest distributor of books, digital content and entertainment products. The company leverages its unsurpassed worldwide distribution network to deliver rich content in multiple formats, anytime and anywhere. Baker & Taylor offers cutting-edge digital media services and innovative technology platforms to thousands of publishers, libraries and retailers worldwide. Baker & Taylor also offers industry-leading customized library services and retail merchandising solutions. Baker & Taylor is proud to power Blio (blioreader.com), the world's most flexible, engaging and revolutionary e-Reading application. Charlotte, N.C.-based Baker & Taylor is majority owned by Castle Harlan Partners IV, L.P., an institutional private equity fund managed by Castle Harlan, Inc., a leading private equity investment firm.
Baker & Taylor and the Baker & Taylor logo are trademarks of Baker & Taylor, Inc. Blio is a trademark of K-NFB Reading Technology, Inc. Other company and product names mentioned for identification purposes may be trademarks of their respective owners.
SOURCE Baker & Taylor, Inc.
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Link is embedded in the news. Ulrabooks are becoming more like tablets and may eliminate the need for them.
Nomura Securities maintains a 'Reduce' on Intel (NASDAQ: INTC) price target of $21.00.
Nomura analyst, Romit Shah, said, "We walked out of the Intel's press event yesterday wanting to own an Ultrabook. This is an all-in-one device (laptop, tablet and game-station). The company showcased designs from Samsung, Toshiba, and Lenovo featuring Windows 8 with touch, a powerful 22nm Ivy Bridge processor, and DX11 gaming. There were also new features such as speech recognition, motion detection, and a touch pad. And all of this was packed into a super-thin device (17.8 in screen width) weighing less than 3 pounds. The leading touch controller suppliers Atmel (Nasdaq: ATML)(Not rated) and Cypress (NYSE: CY)(not rated) could be big beneficiaries from Ultrabooks. We estimate 100mn units (40% of laptops) could increase the touch controller TAM by $300-500mn."
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I don't get this guy reasoning even though he would like to own one.
If you read the review on anandtech.com, it is being compared to Bulldozer. If I recall correctly Moly Eden stated that his demo is not about IVY Bridge but the experience of Ultrabooks.
Nothing surprise me any more. Intel is being thrashed when actual Ivy Bridge has not been demoed or benchmarked.
There is no link for this announcement as more will be announced later. IT appears that this is to counter Apple voice recognition product called Siri. I believ Apple and Intel are on war path.
-------------------------------
Jan 9 (Reuters) - Nuance Communications Inc :
* Co, Intel announce collaboration to voice-enable Ultrabook devices; more
details to be given later in 2012
((Bangalore Equities Newsroom; +91 80 4135 5800; within U.S. +1 646 223 8780))
Analysts are so negative about Intel-it is amazing. 50% of Intel revenue could be impacted. Coming week hopefully make it clear.
MSFT, INTC Face Different Challenges From ARM Camp
Posted by Tiernan Ray
With the Consumer Electronics Show coming up in Las Vegas next week, some of the analysts this week tuned up their outlooks for the next version of Microsoft’s (MSFT) Windows, which will have support for processors other than those of Intel‘s (INTC) and Advanced Micro Devices’s (AMD), such as chips from Nvidia (NVDA) and Texas Instruments (TXN).
The phenomenon, called Windows-on-ARM, because it employs chip technology developed by ARM Holdings (ARMH), will mean very different things to Intel and Microsoft, according to a note today co-authored by Nomura Equity Research‘s Romit Shah, who is the chip analyst covering Intel, and Rick Sherlund, the software analyst.
“Microsoft’s support of Windows-on-ARM is a significant change in strategy, which we have felt is likely to have a negative longer-term impact on Intel and its longstanding exclusive relationship with MSFT,” write the two.
Basically, Shah sees ARM’s technology, and, thus, the technology of Nvidia and other partners, catching up with that of Intel’s mobile chips in terms of performance, presumably while preserving battery life. “ARM Cortex-A9 (quadcore Tegra 3) cores are very close to Atom in performance, as measured in Dhrystone MIPS, suggesting that ARM has the potential to encroach upward into the notebook market.”
Shah has a Neutral rating on Intel shares.
For Microsoft, on the other hand, Windows 8 will be one of four new products coming out this year that should help enhance sentiment on Microsoft stock, writes Sherlund, the other three being the mobile version of Windows, Windows Phone 8, Windows 8 Server, and Office 15. Sherlund maintains a Buy rating on Microsoft shares and a $32 price target.
And Sherlund highlights the importance of ARM devices for moving Microsoft forward in tablets:
There would be a risk to MSFT in the tablet market if there were a delay in the ARM version of Windows, since the press will likely be eager to publish side-by-side product comparisons of the elegant ARM-based iPad (iPad 3 by then) with a Windows 8 based tablet. If that tablet runs on Intel, it would likely be thicker (accommodate a fan) and deliver significantly shorter battery life at possibly a higher cost associated with Intel and Windows (pricing not yet announced) vs an ARM version. Apples-to-apples comparison of tablets would favor Windows 8 on the ARM platform vs Windows 8 on the Intel platform, which is why MSFT is supporting ARM to begin with. MSFT no doubt wants this to be an ARM vs. ARM comparison with Apple.
The note today is similar to a note co-authored yesterday by Sanford Bernstein‘s chip analyst Stacy Rasgon and software analyst Mark Moerdler. They write that Intel has “asymmetry” in the risk and rewards it faces with respect to the PC market.
Intel “simply has much more to potentially lose from an ARMH PC presence than they have to gain by pushing into the ultra-mobile space,” the two write.
The direct threat to Intel’s processor sales is unlikely, they write, as Intel is fighting back with finer-line-width technology:
We remain somewhat unconvinced as to exactly why consumers might chose to utilize an ARM-based PC vs. a traditional x86 PC, particularly as a replacement for mainstream or performance devices. For instance, while ARM’s all-day battery life potential in PCs is touted, we would note that Intel’s mainstream product roadmap lays out a fairly compelling case for the Haswell chips at 22nm being “good enough” in power consumption versus ARM in 2013 while maintaining Intel’s performance lead. We would also note the lack of backward compatibility for applications on ARM systems that may, at least initially, cause some FUD-related headwinds around adoption.
Rather, there’s a threat that any success by arm could hurt Intel’s ability to maintain prices: “Broader pricing pressure throughout Intel’s mainstream MPU portfolio could conceivably impact ~50% of total revenues, as well as present an additional gross margin headwind.”
For Microsoft, whose shares Moerdler rates Outperform, it seems like it has everything to gain:
Windows 8 on ARM represents a way for Windows to gain share in the tablet and smartphone market, while covering their bases in case ARM takes off in PCs. The more different Windows 8 tablets and smartphones offered with different price points, capabilities, form factors and manufacturers the better the potential is that Windows 8 will be successful. We believe that a successful launch of Windows 8 helps disprove the bear case that Windows is going-off-a-cliff.
Ultrabooks can learn a lesson from Tablets
SAN FRANCISCO (MarketWatch) ? Makers of the coming wave of thin and light Ultrabooks can learn from the failures of the tablet market ? which is still really an iPad market ? and the biggest lesson they?ll learn is about price.
At next week?s Consumer Electronics Show, computer makers will be showcasing the ?Ultrabook,? their latest attempt to reinvigorate the PC business, with more new models unfurled at the show.
The Ultrabook ? a name conjured up and trademarked by Intel Corp.INTC?? is a thinner and lighter laptop, like Apple Inc.?s AAPL?MacBook Air, without hard drives or DVD players.
But unlike netbooks, the low-cost smaller devices that were buzzed about at CES in 2009, and crashed and burned a year later, Ultrabooks are fully functional PCs. And they also represent an attempt by Intel and the PC industry to try and ratchet up laptop pricing with a thinner, sleeker design that will appeal to those who love the cachet of Apple products.
?They are trying to get Windows PC buyers to spend more,? said Patrick Moorhead, principal analyst of Moor Insights & Strategy. ?So the value proposition is spend two or three hundred dollars more for a laptop, you get a thinner and lighter laptop, a lot better battery life, faster startup, and it?s more secure.?
So therefore, Ultrabooks are more expensive than the standard notebook and some models, albeit typically with larger screens, approach the lowest cost MacBook Air, which starts at $999 for an 11-inch screen.
But will consumers, who are used to the lower prices for Windows-based PCs, pay a premium for the sleeker model, if it?s not a MacBook? PC makers should revisit some of the gaffes made in the tablet arena, where most of the mistakes have to do with pricing. Developing a new category of product that imitates one by Apple may succeed if it?s priced at a bigger discount.
One example that comes to mind from the tablets wars is the Hewlett-Packard Co. HPQ?TouchPad, which became a hot product only after its price was slashed to $199, down from its original price at parity with Apple?s iPad at $499. But the markdown was done as a way to move inventory in a business that H-P had decided to shut down. Analysts estimate that H-P clearly lost money on every TouchPad that it sold below $200.
So far, the current crop of Ultrabooks start at around $900, some with a 13-inch screen. The price can easily climb if buyers choose a faster processor, or a denser solid state device that stores more. Lenovo Group?s lowest-cost IdeaPad is currently priced at $1,199, on sale. The svelte ASUS 2357?Zenbook starts at $999 for a silver system with an 11.6 inch screen
?Ultrabooks at the price point where they are today appeal only to a segment of style-conscious, price-insensitive consumers,? said Sarah Rotman Epps, a Forrester Research analyst, in an email. ?In our September survey of 5,130 U.S. online consumers, 1% said they already owned an Ultrabook and an additional 22% said they were interested or very interested in purchasing one at the current price points.?
Rotman Epps noted that as prices come down, the appeal of the Ultrabook will expand to more PC shoppers.
?As prices come down ? $600-$700 may be the sweet spot, but we haven?t done any formal price testing on it ? the appeal of Ultrabooks will grow to more of a mass market, but they won?t take over all portable PC sales because some consumers and enterprises will want products that are still cheaper and/or more rugged or more powerful,? she added.
At the moment, with the current price range, some consumers may even wonder if they should instead buy the smallest version of the hipper MacBook Air, which was the top-ranked laptop in the 11-inch monitor category, and the second ranked in the 13-inch monitor category, by Consumer Reports in December.
Chip giant Intel has ambitious goals for Ultrabooks, even though its chips are also the brains of Apple?s MacBook Air. At the Computex show in Taipei last spring, Intel executive vice president Sean Maloney predicted that Ultrabooks will make up 40% of the consumer laptop market.
?A lot of it has to do with the pricing, starting with the screen size,? Moorhead said. ?The lowest price [for an Ultrabook] you can get today is $799. They go up to $1400 or $1599 depending on how you can configure them. That is still less expensive than trying to get a MacBook Air, but it?s still well above the consumer average for a notebook which is around $600 or $700. The last thing they want to pull is the price lever.?
PC makers are betting these new features and sleeker, lighter chassis merit a premium price. But in the end, they may have to drop prices further to win market share from Apple. Intel Capital has a $300 million fund that is investing in new technologies to support the Ultrabook model. ?Intel is copying exactly what it did on Centrino,? Moorhead said, referring to its successful campaign to help push its built-in WiFi technology.
?Apple is setting the standard for form factor and the high-end price points,? Rotman Epps said. ?Other consumer electronics firms are scrambling to keep up and haven?t been able to justify the premium prices that Apple has ? first in tablets and now in Ultrabooks.?
Moorhead said PC makers? costs will decline, especially as their volumes increase, but he believes Ultrabook pricing will decline at a faster rate. ?I think they are willing to give up some points of margin to drive volume.?
It appears that tablets are losing its appeal as Ultrabooks take over. So focus for Intel going forward will be Smartphones and tablets in that order.
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Canaccord Genuity CES Preview: Focus Shifting Away From Tablets
Analyst, Bobby Burleson, said, "We expect CES to offer a short-term boost to shares of Atmel (Nasdaq: ATML)(Hold, PT $13), Intel (Nasdaq: INTC)(Hold, PT $24), and NVIDIA (Nasdaq: NVDA)(Hold, PT $15), driven respectively by ubiquity of touch, debuts of quad-core tablets and smartphones, and the introduction of dozens of ultrabooks. Following CES-related enthusiasm, we believe PC demand is likely to hold back shares of Intel and NVIDIA, while Atmel could trade sideways as investors wait for another number cut on weak industrial and comms demand. Longer term, we like Atmel for MCU share gains and proliferation of touch into low cost smartphones and non- tablet/smartphone markets. A win in a next gen Kindle Fire could provide a medium-term catalyst."
"Expecting less tablet excitement - more focus on ultrabooks and smartphones - While we expect numerous Android tablets to be on display during next week's annual Consumer Electronics Show (CES) in Las Vegas, a lack of strong sell-through for devices ex-iPad (Nasdaq: AAPL) or Kindle Fire (Nasdaq: AMZN) should dampen tablet enthusiasm, in our view, despite the recent release of Google's Ice Cream Sandwich OS (Nasdaq: GOOG). Ultrabooks are likely to garner more attention, as these slim, SSD-based devices offer PC OEMs their best near-term to the challenge from tablets. Several models are currently shipping, and we expect dozens more ultrabooks to debut at the show. Quad-core smartphones should also be on display, and NVIDIA could get a boost from related announcements Monday evening ahead of the show."