Intel and Microsoft’s Secret Weapon Against Apple

Tim Bajarin / March 19th, 2012

Intel and their partners are about to launch the biggest promotion in a decade for a new product category called UltraBooks. Microsoft is also about to launch a major update to Windows called Windows 8 that introduces a new user interface based on touch with their new Metro UI. Together they are critical products for the future of each company individually.

Form Factor Evolution

In the case of UltraBooks, I actually see them as the natural evolution of laptops and not revolutionary as Intel would like us to think. Rather, they take advantage of the industry’s constant push to make things smaller, lighter, thinner and have better battery life. For mainstream consumers who have had to lug around their rather bulky laptops for the last 5 years, they would be justified in asking Intel and other Wintel vendors “what took you so long?” Given the fact that Apple has had their MacBook Air on the market for 5 years and it has defined what an Ultrabook should be.

With Windows 8 and Metro, Microsoft is also following an evolutionary path towards touch interfaces with their Metro based smart phones and soon to be Metro based tablets and PCs. Again, consumers could ask Microsoft “what took you so long?” since Apple has had their touch UI on the iPhone for 5 years and on their iPads for 2 years.

But both products have some interesting challenges attached to them when they launch later this year. In the case of UltraBooks, they most likely will have starting prices of at least $799-$899 although I hear there could be at least one that is pretty stripped down coming out at around $699.00. At these prices, they completely miss the mainstream laptop market that represents the bulk of laptops sold and are priced from $299 to $599.

In the case of Windows 8 and Metro, while Metro is great on Microsoft’s phones and works very well on the tablets I have tested it on, it does not translate well to the laptop or PC since 100% of existing PCs don’t have touch screens on them. And most of the PC vendors are not putting touch screens on the majority of their new laptops because to do so adds at least another $100-$150 in cost to the customer. If you have tested the consumer preview of Windows 8 and Metro on an existing laptop, you know how frustrating it is to use it on existing trackpads. I consider this an Achilles’ heal for Windows 8 and one that could really hurt its short-term prospects.

To be fair, Microsoft has recently (three weeks ago) released recommended guidelines for next generation track pads and a new design I have seen from Synaptics could make laptops work well with Metro once it gets into new laptops. But this should have been something Microsoft focused on a year ago and had all of the new laptops “Metro” enabled at launch. My sense is that Microsoft should have only launched Metro on tablets this year and gradually moved Windows 8 Metro to the consumer PC markets once they had laptops optimized for it.

Instead, I see a lot of consumer confusion on the horizon when they try to use Metro on existing trackpads and any other non-touch input device, as the experience will be confusing at first and frustrating afterwards. Also, you notice that Apple has not put touch screens on their laptops and desktops and instead, worked extra hard to create trackpads and external trackpads that map to the touch experience on the iPhone and iPad.

I consider the initial pricing for UltraBooks and putting Metro on laptops and desktops issues that could slow down any early adoption of these products this year and perhaps deliver a graduated adoption in the future. The two companies do have a secret weapon in the works that could get them a lot of kudo’s from the marketplace and be a key component in getting users really interested in Intel and Microsoft again.

A New Category

The secret weapon comes in the form of a new form factor often referred to as “hybrids.” These are either tablets that can be docked into a keyboard, turning them into a laptop or a laptop with a detachable keyboard. You might think they are one in the same, but they are very different in terms of design goals. In the case of the first, the design is specifically around the tablet and the keyboard dock is modular. We already have a lot of examples of this with the iPad where the tablet is the central device and the attachable Bluetooth keyboards are more of an after thought. In this case the keyboard just supports the input functions of the tablet. The same is true with the Asus Transformer line of devices.

But in the latter case, the design is around a slim laptop case and the screen (tablet) can be taken off and used as a tablet. I believe this latter design is the secret weapon that Microsoft and Intel can use against Apple and at least on paper, give Apple a run for the money especially in business and the enterprise. To a lesser extent it could be hot in some consumer segments where the keyboard is critical to what they do with a tablet and want a laptop centered experience as well.

This is where Apple’s current strategy can be challenged as they are offering these market two distinct products. There is the iPad that stands by itself, and then the MacBook Air, their UltraBook that like the iPad, also stands by itself as a separate product. The key reason is that each has their own operating system and although Mountain Lion, Apple’s new version of OS X brings a lot of iPad like iOS features to OSX, they are still separate and distinct operating systems.

But with the introduction of Windows 8 and used especially on a laptop centered hybrid in which the screen (tablet) can be detached and used as a true tablet that takes full advantage of Metro, Microsoft and Intel can give their customers the best of both worlds in a single device. When in “UltraBook” laptop mode, users can use Windows 7 and its comfortable UI they are used to and have available to them the over hundreds of thousands of Windows apps as is. But when the screen detaches, it automatically defaults to the Metro UI and the touch experience is now central to the device. Now apps designed for Metro can give the users a rich tablet experience out of the box. Sure, they could default to old Windows programs if needed, but running those on a tablet is clunky at best.

If done right, the user would end up with a Windows 8 UltraBook with a detachable screen (tablet) and have to only buy one device instead of two. Our research shows that IT and even some consumers would have no trouble paying $999 and above for this combo product. At this price it would be a bargain. Most IT purchased laptops are in the $699-$999 range now and those who bought iPads to augment their users work experiences cost at least $599 so a combo device say at even $1299-$1399 is more then reasonable for them. Intel knows this and believes that as much as 50% of all Windows tablets will be hybrids. And Microsoft will push these types of designed products especially if the uptake on Windows 8 on laptops doesn’t take off as planned.

Could anything potentially derail Intel and Microsoft’s “hybrid” strategy? Well, if Apple applied their great innovative design knowledge to creating a hybrid that blends the iPad and the MacBook Air into a single device, it could have an impact their ability to dominate this market. On the other hand, it would validate Intel and Microsoft’s strategy as well. If they beat Apple to the market with their version, which is highly likely since at least four hybrids are set to come out by Oct, it could be the “hero” product of the launch that shows users the value of an X 86 ecosystem and highlight to Windows users the need for Ultrabooks and Tablets and Win 8.

Tim Bajarin

Tim Bajarin is the President of Creative Strategies, Inc. He is recognized as one of the leading industry consultants, analysts and futurists covering the field of personal computers and consumer technology. Mr. Bajarin has been with Creative Strategies since 1981 and has served as a consultant to most of the leading hardware and software vendors in the industry including IBM, Apple, Xerox, Compaq, Dell, AT&T, Microsoft, Polaroid, Lotus, Epson, Toshiba and numerous others.
  • steve_wildstrom

    Makers of Windows laptops have had years to make a touchpad that matches those on MacBooks and they have inexplicably failed to do so. One reason why Apple is stealing their market.

    • Confused

      I am puzzled by Intel’s attack on Apple. Why did Intel line up with all the PC manufacturers and suddenly start basically paying them to attack Apple, which obviously is an exclusive user of Intel’s processors (so far as we know)? Also, we know from Intel’s antitrust problems that Intel usually pays the dominant manufacturer at any given time (DELL back in the early 2000-2005) BILLIONS under the table for exclusivity?

      • synthmeister

        1. Apple has completely ignored Intel in the mobile space.
        2. Apple can switch their OSes to different hardware faster than anyone on the planet–they’ve gone from 6800 to PowerPC to Intel to ARM

      • mhikl

        Good point, not so Confused. Not that it matters much in keeping Apple in the Intel family. If it is in Apple’s interest to stay Intel, it will stay; if not, gone like a tornado. I suspect the chips Intel is given favour to are not ones used by Apple so that is probably the tale used to sell the Intel blarney.

  • Nigeldessau

    In the end it will all come down to price. However good hybrids are, I do not think they will sell in volume above $500. The problem for Intel/MS is getting volume at that price point – where iPad starts.

  • So currently the lowest price Ultrabook is in the $1000 range, and you think they are going to add all sorts of toys and dockable/removable screens and sell for around $700? – in the next two years? – and Apple is going to sit around twiddling its fingers?

    —dream on

  • synthmeister

    It’s a long time till October—another version of iOS, a couple new MacBook Airs, maybe a new version of the iPhone, etc.

    Microsoft always thought their desktop would lead to mobile dominance, but it might be the other way around. Apple’s mobile dominance could take big chunks out of the desktop market.

  • mhikl

    Hybrids are rarely blends giving two equal qualities. If these hybrids work well as a laptop maybe as a back runner tablets at “good-enough” might do well enough. But I don’t see the practicality. On the go, one wants something smallish but large enough with which to do competent work. What will the screen size of these be? Certainly larger than an iPad or comparable tablet. Not so “handy”.

    It will be interesting to see. How ever Apple acts or reacts (a rare thought), rest assured, Apple has run through such a scenario already.

    There is a possibility that those hybrids might end up in back drawers like the knitted toe-socks granny made during one of her spells.

  • iPad is the future,

    why? 90% will use it to surf the net, answer emails, watch video and everything that is net centric.

    The problem with Windows lie in the configuration. it takes a geek to configure it and try to configure logging to the net with wifi, you will pull out all your hairs.

    Whereas as for the iPad it just work.

    Ok the few who use it for work may buy one but how many.

  • The Hybrid model for tablets isn’t new; four or six years ago Intel had prototypes for both Tablets that detached from keyboards and sliders, Tablets that hid the keyboard under the screen. The difference between then and now is the software is better optimized for touch. Also Microsoft is tacking the kernel of Windows (NT) back to its roots where it was built to be on multiple hardware platforms

  • Darktanone

    The iPad defined the tablet space with a powerful device that offers ease of use, simplicity, beauty and a great user experience. The MacBook Air redefined what a laptop should be at a price that’s hard to beat. Melding the two together to create this two-headed-Frankenstein beast will fall flat. Microsoft failed when they attempted to put Windows on a tablet before. This time they’ve doubled up their efforts. There are now Intel and ARM versions. Huh? This is just not going to work! You’ll see!

  • I am surprised of one thing:
    Apple doesn’t sell any computers for less than roughly 1000$ (around 950$). If you want a computing device for less then you turn to the iPad between 400$ and 700$.

    I used to think that the iPad sucked because it was a peripheral and I didn’t need 1 more. The iPhone was enough…With iCloud the iPad is now nearly a standalone computer.

    Still I think that the sweet heart of the battle is both on price and cloud:
    – apple doesn’t sell any ‘real’ computer for less than 1000$ and than can be done (maybe they will soon)
    – icloud is still in it’s infancy by this will be the key to the platform war… making OS irrelevant. Dropbox, Amazon and Google are also tough competitor in this space.

Protected by Gerben Law