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Intel May Drop Prices for Core i5 ULV to Push Ultrabooks

By - Source: Barron's | B 32 comments

Intel may be bowing to the pressure of system vendors and reducing the price of some low-power processors to enable lower ultrabook prices.

Williams Financial Group analyst Cody Acree told clients that the process manufacturer could be dropping the tray prices of Core i3 CPUs by about $25 to $27. At this time, Intel currently offers three ULV i5 chips that sell for prices between $225 (i5-3427U) and $250 (i5-2557M and i5-2537M), which means that the analyst is anticipating a price drop of about 10 percent.

His reasoning stems from an increasing threat from AMD-based "Sleekbooks", which are hitting the price target of $700 and below much faster than Intel's Ultrabooks. Ultrabook makers have been complaining about the high cost of Intel processors preventing them from bringing down their bill of materials (BOM) and delivering on the $700 retail price goal. To achieve that goal, the BOM has to land somewhere between $500 and $550.

Acree's colleague Stacy Rasgon of Bernstein Research dismissed concerns that there is an "execution risk" on AMD's side and noted that AMD is becoming financially much more reliable, which indicates that we could once again be seeing a much more competitive AMD. Acree showed a considerable focus on Sleekbook pricing and the potential success. If he is right and AMD is able to piggyback on Intel's Ultrabook campaign with much cheaper same-class devices, Intel may, in fact, be forced bring its processor prices down and compromise on its comfortable margins today.

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Top Comments
  • 14 Hide
    iceman1992 , July 10, 2012 1:42 AM
    boiler1990C) the MacBook Air attracts more people since you get a better user experience for the same price as a Windows-based Ultrabook.
    No you don't..
Other Comments
  • 1 Hide
    TheBigTroll , July 9, 2012 11:12 PM
    finally intel!!!!
  • 0 Hide
    nocteratus , July 9, 2012 11:21 PM
    at least 1 good news!
  • Display all 32 comments.
  • -1 Hide
    oj88 , July 9, 2012 11:27 PM
    10% discount is really nothing for Intel, who does this routinely every summer as the back to school sale. I would expect another 20% discount in Q2'13 when AMD's 28nm APUs coming out in volume.
  • 8 Hide
    Blandge , July 9, 2012 11:58 PM
    boiler1990C) the MacBook Air attracts more people since you get a better user experience for the same price as a Windows-based Ultrabook. Intel really needs to push the price angle if they want to really sell well against the Air and AMD's offerings.


    No really. Intel doesn't gain anything from undercutting the MacBook Air. I'd say it's more because of AMD.
  • -3 Hide
    kcorp2003 , July 9, 2012 11:58 PM
    i want a quad core ultrabook but everything is dual core. i need an ultrabook‬ that can run oracle, VMware, selenium, Komodo Edit, NetBeans & few other tools running in the background.
  • -3 Hide
    TheBigTroll , July 10, 2012 12:37 AM
    wait for hasewell or pick up a macbook pro 15 retina. the price is retarted but you do get a quad core and it is like 1cm thicker than a macbook air.

    wait for hasewell where intel reinvents the notebook
  • -3 Hide
    ashinms , July 10, 2012 1:00 AM
    "which indicates that we could once again be seeing a much more competitive AMD"

    Not if Intel has their way.
  • 14 Hide
    iceman1992 , July 10, 2012 1:42 AM
    boiler1990C) the MacBook Air attracts more people since you get a better user experience for the same price as a Windows-based Ultrabook.
    No you don't..
  • -4 Hide
    neoverdugo , July 10, 2012 2:02 AM
    when will intel learn? How about a 60% price reduction? that will guarantee a better pricing for the UB. Also, give the customer the choice of having either an SSD o HDD. That way the UB won't be that much expensive as long as the SSDs remains pricier than typical HDDs. My only hope is that someone finds a way to make cheaper yet higher capacity volume SSD for the general public.
  • 4 Hide
    amuffin , July 10, 2012 2:05 AM
    Quote:
    the BOM has to land somewhere between $500 and $550.

    Dropping the "BOM" get it? :D 
  • 2 Hide
    Pawessum16 , July 10, 2012 2:17 AM
    Sleekbook, Ultrabook, Netbook......they're always trying to find ways to make the old tried and true laptop seem new again.
  • 4 Hide
    crisan_tiberiu , July 10, 2012 6:28 AM
    "May drop"
  • 3 Hide
    blazorthon , July 10, 2012 7:00 AM
    boiler1990It's about time though. I think Ultrabooks are having issues because A) a lot of people still have netbooks, B) Ultrabooks are expensive compared to most computers, and C) the MacBook Air attracts more people since you get a better user experience for the same price as a Windows-based Ultrabook. Intel really needs to push the price angle if they want to really sell well against the Air and AMD's offerings.


    Macbook Air at the same price point? Did I miss something here?

    kcorp2003i want a quad core ultrabook but everything is dual core. i need an ultrabook‬ that can run oracle, VMware, selenium, Komodo Edit, NetBeans & few other tools running in the background.


    Ultrabooks are portable, not very high performance. There might be some sleek books with a quad core Trinity APU and maybe some very expensive Ultrabooks with a quad core i7, but like you said, dual-core CPUs are much more prevalent in these machines. Laptops are much easier to get with higher performance and for the money if portability is important.
  • 0 Hide
    fidgewinkle , July 10, 2012 8:52 AM
    I've read this rumor elsewhere and I don't get it. Intel pushed the Ultrabook concept to increase their sales of expensive processors, and it has worked. Reports suggest that the high end notebook market has grown 30+% year over year. That is huge for Intel. It doesn't matter if the whole market is Ultrabooks. It just matters if more high priced processors and motherboards are going out the door.

    One might think that tablets are a threat, but that is covered too. There will be a low end Intel tablets with Atom and a high end tablets that will essentially be an Ultrabook. There is no need to drive the price of a processor that is better than anything AMD produces down. It just doesn't make any sense. Of course, there will be price drops, because there are always price drops on processors. However, the view of the market reported here makes no sense.
  • -1 Hide
    CaedenV , July 10, 2012 1:45 PM
    math is a funny thing....
    dropping the price of i3 processors by $25 does not equate to a 10% discount on a $250 i5. It is a 0% change on the i5, and a larger than 10% drop on the i3 as they would be cheaper to begin with.
  • 0 Hide
    trnddwn33 , July 10, 2012 1:54 PM
    boiler1990 Intel really needs to push the price angle if they want to really sell well against the Air and AMD's offerings.


    Keep in mind the Air uses Intel chips as well... Thus Intel doesn't really care if you buy an Air or an Ultrabook. It is simply trying to capture a portion of the market currently occupied by AMD.
  • 0 Hide
    hector2 , July 10, 2012 2:10 PM
    I don't know. Maybe the EU will fine Intel another $1B for playing hardball and cutting prices to give AMD some tough competition.
  • 0 Hide
    eddieroolz , July 10, 2012 2:29 PM
    Well jeez Intel, took you long enough to realize that lower prices are better for adoption.
  • 2 Hide
    willard , July 10, 2012 2:36 PM
    neoverdugowhen will intel learn? How about a 60% price reduction?

    You don't ask for much, do you?

    Also, I don't think Intel needs to "learn" anything. They've posted record profits something like four years running now. With $12.9 billion in revenue in the first three months of this year alone, I don't think they need business advice from you.
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