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Acer Says It's Not Making Any Money From $799 Ultrabook

By - Source: The Verge | B 36 comments

Our dream of a $499 Ultrabook is going to come at a price.

When the Ultrabook concept was first unveiled, the sweet spot for pricing was supposed to be 'under $1000.' In the months that have passed since, manufacturers have said they are hoping to make these super sexy and slim machines even cheaper. And when we say cheaper, we mean half of that original goal price. Right now, prices are sitting at around $1000 or just over, depending on the manufacturer, but PC manufacturers are hoping to get the price down to $499 or $599 in the next year. At CeBit this week, Acer reiterated its intention to get the price of Ultrabooks down to $499. However, the company also revealed something interesting about its current $799 Ultrabook: It's not profitable.

Right now, the company is selling its Aspire S3 for $799/€699 but, according to Acer's Christoph Pohlmann, this isn't a profitable price. The Verge cites Pohlmann as saying Acer is basically just breaking even as far as its entry-level Ultrabook is concerned and the whole venture is only made worthwhile by the money brought in by the higher-spec'd SKUs.

"Christoph told us that the S3 is at present priced on what is essentially a promotional basis — aiming to attract more converts to the hardware platform and the idea of truly ultraportable computing — which is unlikely to last over the long term," writes Vlad Savov. "The current costs of sourcing the necessary components and then manufacturing ultrabooks, said Cristoph, are prohibitive for any price point approaching €499, never mind $499. He does leave open the possibility that efficiencies in production and cheaper components could drag the price down, but he was generally dubious on the idea of a sub-$500 ultrabook."

It's not at all unusual for companies to choose to take a loss on a product just for the sake of pricing their product competitively. A recent example of this is Amazon's Kindle Fire, which is priced at $199 but costs more to manufacture. However, in Amazon's case, the company will make that money back on content sold for the tablet. For Acer to sell its Ultrabooks at a loss is more of a risk than, for example, selling a games console at a loss (where, again, money can be made elsewhere -- games and royalties) and it's likely Acer won't make that money back all too quickly. It'll be interesting to see how fast Acer can take the Ultrabook price down to $499. The company has said on more than one occasion that it hopes to do so by 2013. But will it be possible? It's likely the cost of production of Ultrabooks will fall somewhat, but it's unlikely it will fall by that much. It sounds like Acer will have to subsidize each unit by a considerable amount if it wants to make good on its promise of $500 Ultrabooks by next year.

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Top Comments
  • 18 Hide
    atikkur , March 8, 2012 7:11 PM
    cheaper price is always welcomed..
  • 14 Hide
    neoverdugo , March 8, 2012 8:00 PM
    No wonder the ultrabooks are somewhat expensive. The idiots of intel convinced the laptop makers to use medium to high end components. Which includes high end i3, i5 and i7s, along with SSD at 128, 240 and 256 GB range. The problem is that the intel CPUs and SSD are expensive on their own, combined with a laptop and you got yourself a desktop-on-the-road, pun intended (without an adequate graphic processor). If acer wants a 500 dollar ultrabook, they should look at AMD or ARM. I bet the price tags will go down along the manufacture costs.
  • 12 Hide
    masterasia , March 8, 2012 7:35 PM
    I would buy an Ultrabook for $500. Let's hope battery life improves too. So far it looks like the HP Folio has the best battery life.
Other Comments
  • 18 Hide
    atikkur , March 8, 2012 7:11 PM
    cheaper price is always welcomed..
  • 9 Hide
    the_krasno , March 8, 2012 7:28 PM
    It's a risky move but they can get a bigger base in the market which can pay off in the long run.
  • 1 Hide
    heman8400 , March 8, 2012 7:29 PM
    I've always been under the impression that a "race to the bottom" in any industry, reduces profits. Apple's made a business model (for their computers) on premium parts + higher price = more profits. If they aren't making money at $800, why is the answer "lets lower the price?"
  • -6 Hide
    nforce4max , March 8, 2012 7:29 PM
    Reduce the size of the board and then they can make room for a larger cooler which will allow for a higher tdp cpu for more speed.
  • -6 Hide
    bloc97 , March 8, 2012 7:30 PM
    Quote:
    A recent example of this is Amazon's Kindle Fire, which is priced at $199 but costs more to manufacture. For Acer to sell its Ultrabooks at a loss is more of a risk than selling a games console at a loss. It'll be interesting to see how fast Acer can take the Ultrabook price down to $499.


    WHAT? I can't believe that a single Ultrabook can take more than 499$ to manufacture... :fou: 
    I always thought that those things were manufactured in groups and cost only 200$ for 10 ultrabooks.
  • 8 Hide
    bloc97 , March 8, 2012 7:32 PM
    nforce4maxReduce the size of the board and then they can make room for a larger cooler which will allow for a higher tdp cpu for more speed.


    Lol an Ultra(large)book... :D 
  • 12 Hide
    masterasia , March 8, 2012 7:35 PM
    I would buy an Ultrabook for $500. Let's hope battery life improves too. So far it looks like the HP Folio has the best battery life.
  • -6 Hide
    mikenygmail , March 8, 2012 7:36 PM
    It's not true that Acer is not making money on an $800 thin laptop.
    They don't even cost $500 to make, let alone $600 or $700.
    Unless this supposed $800 price includes a gigantic TV ad campaign, it's nonsense.
  • 0 Hide
    bloc97 , March 8, 2012 7:42 PM
    heman8400I've always been under the impression that a "race to the bottom" in any industry, reduces profits. Apple's made a business model (for their computers) on premium parts + higher price = more profits. If they aren't making money at $800, why is the answer "lets lower the price?"


    Because their product is already in-shelf and they can't afford paying an revision (taking back all products and improving them), so the best they can hope is to lower the price... (at least they don't loose 100% of the price that took to make products)
  • -6 Hide
    lpedraja2002 , March 8, 2012 7:59 PM
    bloc97WHAT? I can't believe that a single Ultrabook can take more than 499$ to manufacture... I always thought that those things were manufactured in groups and cost only 200$ for 10 ultrabooks.


    My thoughts exactly, these Ultrabook are underclocked laptops with a Solid State Drive and a lot slimmer too, so how could they not make any money out of them? Must be the Solid State Drives prices which were affected by the Thailand floods.
  • 6 Hide
    Anonymous , March 8, 2012 8:00 PM
    Cheaper is not always welcomed. It could really mean a poorly put together system. Ultrabooks will be expensive. No way around it due to the expense of its parts. You'll need an SSD (but you can ditch the video card with Ivy and Trinity), USB3, eSata, and possibly Thunderbolt for external GPU. You will also need an expensive LCD display plus some kind of capability for tablet functionality. This will make it hard to put out cheap systems. I wonder also, will they have some kind of 3G/4G capability on board?
  • 14 Hide
    neoverdugo , March 8, 2012 8:00 PM
    No wonder the ultrabooks are somewhat expensive. The idiots of intel convinced the laptop makers to use medium to high end components. Which includes high end i3, i5 and i7s, along with SSD at 128, 240 and 256 GB range. The problem is that the intel CPUs and SSD are expensive on their own, combined with a laptop and you got yourself a desktop-on-the-road, pun intended (without an adequate graphic processor). If acer wants a 500 dollar ultrabook, they should look at AMD or ARM. I bet the price tags will go down along the manufacture costs.
  • 3 Hide
    Anonymous , March 8, 2012 8:06 PM
    Neoverdugo, you are probably right. The Ultrabooks Intel envisions are fully capable road warrior PCs that can do anything your desktop can do PLUS the mobility of a tablet with long bettery lives and touch capability. That is not a cheap system.

    Sub $500 systems are probably traditional netbook type machines with ATOM, C-50, ARM type systems with little hardware that are very specific in functionality. Still much more functional than tablet, but not overly useful for large scale business.
  • 3 Hide
    obsama1 , March 8, 2012 8:10 PM
    The Acer Ultrabook is OK, but the Zenbook is still better.
  • 4 Hide
    blazorthon , March 8, 2012 8:26 PM
    treetopboyNeoverdugo, you are probably right. The Ultrabooks Intel envisions are fully capable road warrior PCs that can do anything your desktop can do PLUS the mobility of a tablet with long bettery lives and touch capability. That is not a cheap system.Sub $500 systems are probably traditional netbook type machines with ATOM, C-50, ARM type systems with little hardware that are very specific in functionality. Still much more functional than tablet, but not overly useful for large scale business.


    If you don't mind going a little thicker, there are $300 or so laptops with fairly good performance, especially the A6 Llano ones. It's not having mobile performance that's the problem, it's having it in such a thin form factor. Cheap notebooks don't need to have crap Atoms, C-50s, ARMs, etc, the ultrabooks are just too thin to use the cheaper notebook components.

    For example, it wasn't until a month or two ago that high performance CPU coolers came out for ultrabook form factors that were cheap to make when a company developed a thinner, high efficiency heat pipe technology.
  • 3 Hide
    eddieroolz , March 8, 2012 8:35 PM
    You're going to have to pay for mobility, but at $799 I thought they'd be making some money. Intel might be ripping the OEMs off in this case.
  • 1 Hide
    bloc97 , March 8, 2012 9:08 PM
    eddieroolzYou're going to have to pay for mobility, but at $799 I thought they'd be making some money. Intel might be ripping the OEMs off in this case.


    I agree with you, sub-1000$ Ultrabooks (good quality) are somewhat rare. And this Ultrabook at 799$ should sell very well...
  • -1 Hide
    jaber2 , March 8, 2012 9:09 PM
    If only others would do the same, I would love to pay $100 for the new iPad.
  • 1 Hide
    dalauder , March 8, 2012 10:27 PM
    jaber2If only others would do the same, I would love to pay $100 for the new iPad.
    You're talking unrelated gibberish.
  • 1 Hide
    dalauder , March 8, 2012 11:34 PM
    mikenygmailIt's not true that Acer is not making money on an $800 thin laptop. They don't even cost $500 to make, let alone $600 or $700. Unless this supposed $800 price includes a gigantic TV ad campaign, it's nonsense.
    It has to include ALL costs if they're talking about "profitable". An add campaign is absolutely necessary or nobody will know what an "Ultrabook" is.

    A lot of people here are confused about "high-end parts". Apple uses the same parts inside. The only difference is a higher quality case and Apple software, for the most part.

    Blazorthon brought up a good point that Ultrabooks are expensive because they all use new proprietary parts. Once there are standard ultrathin coolers produced by the millions instead of quantities of 8,000, it'll get substantially cheaper. Right now, these things actually do cost 1.5x as much to make as a typical laptop, maybe 2x as much. Considering that laptop manufacturers are pretty much all losing money on these sub $500 laptops, of course $800 is hard to profit from with an Ultrabook.

    Once Ultrabooks can get down the to $500 range and pull of i3-370M/A6-3400M performance, I think they'll displace laptops for most people, which wouldn't be a bad thing.

    Now the AMD ultra-slim line has a lot of potential, I think. That's assuming they can do it for less than Intel, although Sandy Bridge i3's and lower are pretty cheap.
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