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Ultra-hyped ultrabooks ultra-flopped in 2012

Here's what manufacturers can do to get ultrabook sales back on track.

By , Network World
January 07, 2013 06:04 AM ET

Network World - Just 12 months ago, the ultrabook was widely regarded as the PC market's savior. Since then, it's become more of a punch line.

The ultrabook made a splash at CES 2012 with its ultra-thin form factor, touch screen and longer battery life. Intel touted the ultrabook as the device that would lead the revival of the PC against the onslaught of the tablet. Instead, a series of missteps and a global decline in PC sales kept the ultrabook from fulfilling its potential.

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The question now is whether the Ultrabook can bounce back, or if ultra-thin laptops will be squeezed out of the PC market.

In early 2012, analyst firm IHS iSuppli forecast 22 million ultrabook sales by the end of the year. At the time, that prediction was relatively modest. Roughly a year ago, Intel claimed ultrabooks would account for 40% of the laptop PC market by the end of 2012. The company had even set aside a $300 million marketing fund to help meet these expectations.

By October, IHS iSuppli released a new report estimating that ultrabook shipments - not sales - had only reached 10.3 million units. The firm also reduced its prediction for 2013 from 61 million ultrabook sales to 44 million.

However bleak the current situation may seem, Craig Stice, senior principal analyst at IHS iSuppli, says it's too soon to call the ultrabook a failure. Intel's lofty predictions forced many to set the bar pretty high for the ultrabook, Stice says. Falling short of that mark made the ultrabook's struggles stand out in an otherwise equally underperforming PC market.

"I would say it performed as well as the PC market performed as a whole, which was sluggish," Stice says. "The PC market in general - it's looking like 2012 is going to be a down year for computers in general. I'm not saying that ultrabooks can't rebound, because they were pretty much new in 2012, but getting people out and purchasing PCs in general, it was a difficult year for it.

IHS iSuppli estimates that PC shipments declined from 352.8 million units in 2011 to 348.7 million in 2012. It was the first time since 2001 that PC shipments have declined year-over-year.

Pricing was a main deterrent to ultrabook sales last year, Stice says. Early ultrabooks were priced in the $1,000 range. Considering that consumers, many of whom use their devices mostly for web apps, could purchase tablets in the $200 to $500 range, Stice says it simply doesn't make sense for them to pay twice as much for an ultrabook.

Moving into 2013, Stice says ultrabook pricing is beginning to creep down to that competitive level. That's because the past year can serve as a research period for manufacturers, he says. Many of the $1,000 devices were what Stice called "model units" of ultrabooks, and as such they were adorned with "all the bells and whistles."

As manufacturers examine customer feedback and conduct more research on how people are using ultrabooks, they'll be able to reshape the devices and build new ones without some of the more expensive components and parts. This will enable manufacturers to drop the price, Stice says.

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