Intel Launches $300 Million Ultrabook Fund To Counter Tablets

Intel seeks to make a cracking comeback into the Laptop scene with an entirely new category of laptops called Ultrabooks, a “float like a butterfly, sting like a bee” machine powered by the new 22nm Ivy Bridge processors and costing under $1,000. Initial specs make it seem like a cross between the MacBook Air and the iPad, bringing us all the benefits of tablets but with the performance and capabilities of laptops.

One of the first Ultrabooks, the Asus UX21, is a 11.6-inch laptop, powered by an Intel Core i5 CPU and sporting an USB 3.0 port, a mini-HDMI port, SSD storage and weighing 2.2 pounds. Asus claims the UX21 can resume from sleep mode in two seconds. These are due to reach shelves in mid-September.

“Ultrabook takes the best technologies and marries them with sleeker designs and extraordinarily long battery life for a new kind of computing experience,” said Peter Hortensius, Lenovo’s Product Group president. “This new type of personal computing aligns with our continual focus on engineering innovative laptop solutions that push the boundaries on mobility.”

The $300m Ultrabook Fund: Intel’s Capital division will invest $300 million towards companies building the ultra-portables as well as software to take advantage of them. The money will be spread over the course of the next three to four years. They expect ultrabooks to gain a strong foothold in the $261 billion industry over the next five years. Intel’s core assets of engineering and manufacturing leadership are made possible by continuous “innovation financing”, and Intel Capital has helped to create the technology ecosystems which underlie many of the most widespread applications of technology today.

PC builders across Asia have been getting unusually direct guidelines for what they should use to make the thin-and-light PCs, including price ranges and the choice of materials. Ultrabooks should not be thicker than 0.7 or 0.8 inches and might have real metal shells and solid-state drives.

We believe the original spec is intended to get Windows PC builders making more exciting notebooks to fight back against iPads and other tablets. The MacBook Air is the closest existing prototype, and has much of the external design and responsiveness of a tablet which Intel wants. In some respects, the ASUS UX21 is uncannily close to its Apple rival. Intel did not specify how much the fund plans to invest in Asia, but said Asia has a big potential for investment, given the large number of manufacturers in the region.

Taiwanese Vendors voice their skepticism: Sources say that designing an Ultrabook based on Intel’s specs won’t reduce the machine’s price level to lower than the MacBook Air’s unless Intel is willing to reduce its prices, which already account for one-third of the total cost. If Intel does reduce its prices, vendors could provide pricing below US$1,000. The new MacBook Airs are priced at about US$999-1,599 and enjoy a huge demand in developed markets, besides having a visible brand clout and first-mover advantage.

Next Steps: Intel plans to deliver the Ivy Bridge to the market by the end of the first quarter of 2012, and shift 40 percent of consumer laptops to the Ultrabook design. Intel’s planned 2013 products, codenamed Haswell are the third step in its evolution and is expected to reduce power consumption to half of the “thermal design point” for today’s microprocessors.

We hope that this concept will be able to produce the perfect, powerful machine that’s less than 3 pounds, forever ending the pad vs notebook debate. For now, convincing their Asian suppliers to switch to Intel’s specifications will be Intel’s biggest challenge, and they should take care not to make costly logistical errors in a notoriously fickle and evolving industry. Still, their net income for the quarter was $3.2 billion, and $300 million is a small investment to make for kick-starting a structural PC shift.

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