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.