Photo of Dell XPS 13 Ultrabook

The Potential Losers if Ultrabooks Win

(Originally published on Forbes)

Ultrabooks were one of the most discussed form factors at this year’s CES 2012.  This was due not only to Intel’s CES marketing push, but by all of Intel’s ecosystem demonstrating their prowess by showing their latest and greatest designs.  OEMs like Dell, HP, Acer, Asus, Toshiba and Lenovo showed their new designs with different industrial design, color, keyboards, displays, Intel processors, storage, and proprietary software and cloud services.  One question I have received often since CES is, “who loses if Ultrabooks are successful”?  We must first start by defining an Ultrabook then move on to a complex discussion with many scenarios.

What is an Ultrabook?

Ultrabooks were introduced by Intel at last year’s Computex 2011. Intel owns the Ultrabook trademark, which means only those who license it and abide by its restrictions can use it. This becomes important as it relates to receiving Intelmarketing and design funds.  If OEMs, ODMs and retailers don’t abide by the Ultrabook definition, they will not be eligible for those funds.

An Ultrabook is a notebook computer that has the following characteristics:

  • Thin: 21mm or less.  As a comparison, the 13.3″ MacBook Air is 17mm at its thickest point.
  • Battery Life: 5 to 8 hours.  The 13.3 MacBook Air, per Apple, gets 7 hours of “wireless web” browsing.
  • Start up: Intel describes that “the system wakes up almost instantly and gives users quick access to their data and applications.”  There are storage, boot, sleep, and BIOS implications to this.
  • Secure: Intel states that “bios/firmware is enabled to expose hardware features for Intel Anti-Theft Technology (AT) and Intel Identity Protection Technology (IPT).”  This means the hooks must exist in BIOS that can talk toIntel AT and Intel IPT
  • Processor: Intel Core Processor Family for Ultrabook.

Storage Implications

Most of today’s notebooks use spinning storage, specifically a 2.5″ hard drive.  On the spot market, you can buy a 1 TB 2.5″ hard drive for $145-110. This is very inexpensive and enough storage to hold just about everything a user may need unless they’re a videophile.  The downside is that physical hard drives are slower and consume more power than SSDs.  To achieve the battery life and more importantly start up requirements, Ultrabooks require some form of SSD.  SSDs can come in the form of an SSD drive or a hybrid drive which has a combined SSD and physical hard drive. A 128GB SSD drive on the spot market is around $175-200.  A 500GB hybrid drive with 4GB flash costs $150 at retail.

The potential losers here are traditional spinning 2.5″ hard drives.  Hybrid drive-based Ultrabooks are just hitting the market and it’s too early to say whether they will dominate over the more expensive, responsive and power saving SSD drives.  Seagate is already in the market with their Momentus XT brand hybrid drives but Western Digital has yet to show up with a consumer solution.

Discrete Graphics Implications

Two different kinds of PC graphics exist, discrete and integrated.  Discrete are a separate graphics chip that is either soldered on the mainboard or most likely a separate card inside the notebook.  Integrated graphics are inside the SOC (System on a Chip) with the CPU and memory controller or it exists in what’s called the “tunnel” or the companion chip to a CPU.  Intel provides integrated graphics only and is the PC graphics market share leader pulled by their CPU franchise.  AMD provides discrete cards and chips, formerly branded ATI,  and also provides integrated solutions with their Fusion-based SOCs.  Nvidia serves the PC graphics market solely with discrete graphics cards and chips.

The potential losers here are discrete graphics.  It’s not they are “banned”, but the Ultrabook specifications make it very challenging to integrate discrete graphics into designs.  The two challenges are height and power draw.  Adding a discrete card and keeping inside the 21mm restriction is difficult but not impossible. Two major players, Lenovo and Samsung have already announced Ultrabooks with discrete graphics.  The announced Samsung Series 5 contains the AMD HD 7550M and the Lenovo ThinkPad T430u will ship with Nvidia Geforce 610M.

Discrete graphics from AMD and Nvidia will again get challenged when Intel unveils Ivy Bridge that has Intel HD 4000 graphics that support Direct X (DX) 11.  AMD and Nvidia have managed to weather the risk through Intel’s DX 9 and DX 10 and I expect a similar kind of battle here.  The ending could be different if AMD and Nvidia cannot effectively market the value of more gaming graphics or GPU-compute horsepower.

Processor Implications

By definition, Ultrabooks must contain Intel Core processors for Ultrabooks.

This means AMD, or for that matter, ARM-based processors from Nvidia, Qualcomm, or Texas Instruments cannot be inside an Ultrabook.  This requires a bit more of an examination as it is regulated by the Ultrabook definition.  AMD atCES 2012 was discussing their “ultrathin” plans and will reportedly enter the market with their Trinity platform.  Press reports describe that AMD will leverage their graphics capability and also enable much lower price points than the $1,000 Intel price point many Ultrabooks sell at.  I expect to hear more from AMD at their Financial Analyst Day next month.

ARM-based SOC suppliers Nvidia, Qualcomm and TI argue they already provide Ultrabook-like benefits with products like the Transformer Prime.  The Asus Transformer Prime is a 10.1″ convertible powered by Nvidia’s quad-core Tegra 3, gets 18 hours of battery life, is super-thin at 16.3-18.7mm thick, and is instant-on with Android 3.2 moving to 4.0 OS.

Security Implications

Intel Anti-Theft Technology and Intel Identity Protection Technology come with the Ultrabook package.  OEMs arent required to support every feature, but many of the features are tied to specific solutions.  For instance, Intel Anti-Theft works with Winmagic, Computrace, and Symantec.  Don’t see your provider?  Well you are out of luck and more than likely the company unless they build to Intel’s spec and APIs.    Because many of the Ultrabook security features are hard wired into the CPU and chipsets, by definition, it has potential implications for AMD.  The potential impact is yet to be seen because AMD has not played their “ultrathin” hand yet.

Marketing Implications

Intel owns all rights to the Ultrabook name.  With that, they have the right to enforce how people use it. This, tied with the 100s of millions of dollars that will be invested in Ultrabooks, will be very impactful to the ecosystem.  AMD cannot use the name Ultrabook without Intel’s expressed permission, something I doubt either party would explore.  If Intelcan make Ultrabooks a household name and consumers then buy online, Ultrabooks have a built-in advantage. and even have a separate digital aisle specifically for Ultrabooks that won’t include anything from AMD.    Amazon currently, on the other hand, does not.  AMD is at the least risk at retail where the “ultrathin” specifications could be evident.  Consumers will see OEM brand, design, thinness, weight and battery life.  Time will tell how powerful the Ultrabook brand will be at physical retail.

Like AMD, no one in the ARM ecosystem like Nvidia, Qualcomm or TI can use the Ultrabook brand either for their Windows 8 clamshell designs.  So that fancy Asus Transformer Prime? Not an Ultrabook in the ads, product reviews nor will Asus receive any engineering or marketing funds.  Would Best Buy rather stock a margin-neutral, 13″ (hypothetical) $599 Asus Transformer Prime or a $699 Asus Ultrabook that gets $50 dollars marketing money per unit?  You know the answer.

So Who Potentially Loses if Ultrabooks Win?

As you can hopefully see by the analysis above, there are many scenarios that must play out before all the winners and losers can be tallied. There are not any clear-cut answers.  This is a highly competitive market and historically, AMD and Nvidia know how to play the game well and have much more experience at it then Qualcomm and Texas Instruments. Qualcomm and Texas Instruments have little or no experience fighting Intel at their own game.

Spinning hard drives without flash are extinct on the Ultrabook but adding flash to a hard drive to make a hybrid isn’t rocket science.  So even Western Digital cannot be counted out yet.

Net-net, there are no simple Ultrabook winner-loser answers but what is for certain is that Intel has shaken up a sleepy Windows PC ecosystem, and that’s a good thing for consumers and the PC industry.

Published by

Patrick Moorhead

Patrick Moorhead was ranked the #1 technology industry analyst by Apollo Research for the U.S. and EMEA in May, 2013.. He is President and Principal Analyst of Moor Insights & Strategy, a high tech analyst firm focused on the ecosystem intersections of the phone, tablet, PC, TV, datacenter and cloud. Moorhead departed AMD in 2011 where he served as Corporate Vice President and Corporate Fellow in the strategy group. There, he developed long-term strategies for mobile computing devices and personal computers. In his 11 years at AMD he also led product management, business planning, product marketing, regional marketing, channel marketing, and corporate marketing. Moorhead worked at Compaq Computer Corp. during their run to the #1 market share leader position in personal computers. Moorhead also served as an executive at AltaVista E-commerce during their peak and pioneered cost per click e-commerce models.

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