Ultrabook Numbers Suggest a Platform in Trouble

There is bad news for Intel on the ultrabook front.

IHS iSuppli this week radically reduced its sales forecast for the product, which are small notebooks. Just how radically? This just about sums it up:

An estimated 10.3 million ultrabooks will ship worldwide in 2012, according to an IHS iSuppli Compute Platforms Topical Report from information and analytics provider IHS (NYSE: IHS). This is down from the previous forecast issued earlier this year of 22 million units. In the newly adjusted forecast for 2012, more than half of the shipments for the year are expected to come in the fourth quarter.

While it is fair to point out that the 22-million-unit figure was iSuppli’s and not Intel’s, there is no way to spin a reduction of more than 50 percent as anything other than disastrous. The fact that most of the sales will come in the fourth quarter could be considered good news in that they suggest that demand was delayed, not absent. This silver lining quickly dissipates, however: iSuppli says that 2013 projections have been reduced from 61 million to 44 million.

The analysts point out that the longer-term outlook is a bit better, assuming marketing and pricing problems are addressed. By 2016, the release says, it is expected that 95 million units will ship.

SemiAccurate, a site that clearly doesn’t put much stock in being polite, had this reaction to the iSuppli numbers:

Lets face it, Ultrabooks have failed because they are a fundamentally bad idea based on nothing more than Intel’s greed and fear. Intel is trying to compete against tablets and phones, and doesn’t have a clue how to do it. Ultrabooks are failing because there is no reason to buy one over a tablet or phone. Why? There are lots of reasons, but that is a separate topic. Lets just say that Intel is slavishly toeing the failed Microsoft line and not offering the consumer any real benefits. To compound the problem, they are jacking up their prices to unpalatable levels while squeezing any hope of profit from the OEMs. As we said over a year ago, there is no possibility of this debacle succeeding.

I wonder what the author, Charlie Demerjian, really thinks.

Joel Hruska at ITProPortal reiterates that the sales figures are from iSuppli and not Intel, so they should be taken with a grain of salt and a conclusion that the category is in trouble should be as well. Hruska suggests that some of the assumptions underlying the analysis and the corrective — to cut prices — isn’t necessarily the best path. His comments have as much to do with computer marketing in general as the ultrabook in particular.

It should be remembered that the predictions an analysis firm such as iSuppli makes are based on consultations with the vendor. In any case, the ultrabook concept is not dead. But the numbers — whether or not it is fair for them to set expectations and then comment on whether or not they have been met — suggest a platform that is in trouble. It will be interesting to see how Intel reacts.

Another issue to consider in the ultrabook equation is whether or not Windows 8 can save the day. Tony Bradley at PCWorld thinks not. He believes that Windows 8 is more suited for devices with touch screens and that Windows 7 still holds sway over a large segment of the populace.