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As ultrabook makers seek stronger sales, some opt for low cost

Ultrabooks still face major profit and market-adoption hurdles, according to an industry source and a couple of reports.

Acer Aspire S3 ultrabook.  Profitability is a nagging problem for Acer, according to a report.
Acer Aspire S3 ultrabook. Profitability is a nagging problem for Acer, according to a report. Acer

Ultrabook suppliers are still dealing with pesky market and profitability issues, according to a CNET source and two reports. And some will turn to low-cost designs as a result.

"The ultrabook adoption during the holiday season was ugly," an industry source, who speaks to ultrabook suppliers, told CNET. That source was speaking about sales for one particular ultrabook vendor.

The market for all ultrabook suppliers, however, is still challenging. "You've got a down market on the eve of a new operating system (Windows 8) at a price point that's fairly robust (high)," said the source.

And Acer, a high-profile ultrabook vendor, said today that it is not making a profit for lower-end models, according to a report in The Verge.

Acer's Aspire S3 ultrabook is priced generally at $899.99 but can go as low as $799.99 at Best Buy.

Acer's chairman said in December that ultrabook sales should be between 250,000 and 300,000 in the fourth quarter.

Other first-tier vendors like Hewlett-Packard and Dell have only just begun to sell ultrabooks so it's not clear how they are faring.

But a report out of Asia claims lackluster sales for vendors is forcing them to rethink the ultrabook. "Existing Sandy Bridge-based ultrabooks are too expensive," the Digitimes report says, citing industry sources.

As a result, ultrabook manufacturers will turn to thin laptops "similar to ultrabooks" that don't incur the high costs of current designs. Metal cases, expensive hinges, and pricey solid-state drives are keeping ultrabook prices too high to attract lots of buyers, according to the report.

Those thin laptops are expected to be priced as low as $600 and launch in the second quarter.

But that strategy could also backfire. Low-cost laptops such as the Netbook were never widely accepted because they were built from cheap chassis materials, used low-end components, and lacked the performance of mainstream laptops.