Calls for Intel to reduce CPU prices ignored

Intel has been the driver of the new “Ultrabook” development phase, bringing high performance, low power and portable Netbook systems to the masses for under $1000. However, it seems manufacturers are struggling to get on-board because they cannot see profits because of Intel’s high CPU pricing strategy. Big notebook vendors have been calling for 50% cuts in ultra low voltage CPU prices so they can maintain workable profit margins.

Intel rebuffed the claims saying the MSRP of $999 was enough to give them room to work with, the only concession it offered was to cut prices by 20% for first-tier vendors only. The new prices still look like this after a 20% discount: Core i7-2677 is $317, Core i7-2637 is $289 and Core i5-2557 is $250. Which means that the rest of the platform still has to be assembled, packaged, retailed and marketed for under $999 when the CPU cost accounts for a whopping 25-31% and that’s with a discount. For other vendors 30-40% of the costs are primarily CPU related without a discount. Intel is forcing vendors to use ultra thin screens, high quality batteries and other fancy technologies in order to make the “UltraBook” actually work. So it would appear that at the current state vendors do not have enough room to manoeuvre at $999, will we see price rises or will we see Intel give in to vendors?

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