Remember ultrabooks? Yeah, no one else does either

Ultrabook sales are going to be pretty disappointing this year, according to a report from IHS iSuppli (see its release below). And that's bad news for Intel and the PC makers who use its chips.

IHS slashed its estimates for shipments of the thin-and-light notebooks to 10.3 million this year, down from its previous forecast of 22 million. More than half of those shipments should come in the fourth quarter, the tech research firm said, likely boosted by the introduction of Microsoft's new Windows operating system.

IHS also expects 2013 to be less rosy, with shipments totaling 44 million instead of its prior view for 61 million. However, sales should continue growing over the next few years, totaling about 95 million units by 2016.

Intel has spent oodles of money marketing ultrabooks, but the effort is falling flat so far. Consumers are opting for shiny new smartphones and tablets instead of notebooks. And pricing hasn't yet declined enough to drive widespread adoption. Ultrabooks are expected to sell at mainstream prices -- around $600 -- but most still cost $1,000 or more.

"There once was a time when everyone knew the 'Dude you're getting a Dell' slogan," IHS analyst Craig Stice said in the release. "Nowadays no one can remember a tag line for a new PC product, including for any single ultrabook. So far, the PC industry has failed to create the kind of buzz and excitement among consumers that is required to propel ultrabooks into the mainstream."

PC market growth has slowed of late as consumers, cautious about the global economy, hold off on computer purchase in favor of mobile devices. Intel, which has been driving the move to ultrabooks, earlier this year launched its biggest marketing campaign since the Centrino WiFi chip to spur demand for the products. The company and its PC customers have been counting on ultrabooks to help reinvigorate PC sales, but sales so far have been disappointing.

Intel and the PC makers have said that this month's introduction of Microsoft's new Windows 8 operating system, which has touch features and other capabilities, would help ultrabook sales. Intel, which in August lowered its expectations for third-quarter revenue by about $1 billion, has maintained that ultrabooks would make up about 40 percent of consumer notebook sales by the end of the year.

Today's forecast from IHS raises some fresh concerns about Intel's ability to meet that guidance. The firm noted part of the reason for its lowered forecast is Intel's "increasingly stringent set of definitions for ultrabooks" that has caused many notebooks to be relabeled as "ultrathins."

But IHS also noted that ultrabooks have the chance to take off in 2013 if new Windows 8 devices reach the $600 to $700 level. And Intel's new processor, code-named Haswell and expected in mid-2013, could also help computer markets "reinvent the PC."

"Challenges stemming from the nebulous marketing and unappealing price surrounding the ultrabook can be overcome," IHS said, "paving the way for shipments to rise by more than 300 percent in 2013."

Here's the IHS iSuppli release:

Dude, You're Not Getting an Ultrabook: 2012 Forecast is Slashed as Pricing and Marketing Disappoint

El Segundo, Calif. (Oct. 1 2012)--Amid high pricing and a lack of effective marketing to draw consumer's attention away from other hot-selling mobile gadgets, global ultrabook shipments are falling short of expectations in 2012, prompting IHS to cut its near-term forecast for the next-generation notebooks. 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.

Along with the revised figures for 2012, shipments have also been modified for the next year, projected to rise to 44 million in 2013, down from the older outlook of 61 million.

The figure below presents the IHS forecast for ultrabook shipments in 2012 and 2013.

"There once was a time when everyone knew the 'Dude you're getting a Dell' slogan. Nowadays no one can remember a tag line for a new PC product, including for any single ultrabook," said Craig Stice, senior principal analyst for compute platforms at IHS. "So far, the PC industry has failed to create the kind of buzz and excitement among consumers that is required to propel ultrabooks into the mainstream. This is especially a problem amid all the hype surrounding media tablets and smartphones. When combined with other factors, including prohibitively high pricing, this means that ultrabook sales will not meet expectations in 2012."

Even so, challenges stemming from the nebulous marketing and unappealing price surrounding the ultrabook can be overcome, IHS predicts, paving the way for shipments to rise by more than 300 percent in 2013. Growth is also expected to continue for the foreseeable future, with shipments expanding to 95 million units by 2016. This will drive long-term growth for devices used in ultrabooks, including motion sensors.

Ultra-priced Ultrabooks?

Beyond the marketing shortcomings, ultrabooks need to get more systems down to the $600 price range in order to hit the volume level needed to enter the mainstream, down from prices at the $1,000 level now. If ultrabooks using the new Windows 8operating system come close to the $600-$700 range next year, while adding in an attractive new consumer feature such as touchscreen, a good chance exists for strong sales in 2013. If not--and ultrabooks stay at the $1,000 level--their sales will continue to struggle in 2013 as they must compete against lower-priced options, such as tablets and smartphones.

"With the economy languishing, ultrabook sellers may have trouble finding buyers at the current pricing, especially with fierce competition from new mobile computing gadgets such as the iPhone 5, Kindle Fire HD and forthcoming Microsoft Surface," Stice said.

Another factor causing IHS to reduce the forecast is Intel's increasingly stringent set of definitions for ultrabooks. Based on these designations, many notebooks once called ultrabooks now are being classified as "ultrathins."

Wait 'til Next Year

While Intel Corp. hasn't given up on ultrabooks in 2012, the microprocessor giant at its Intel Developer Forum (IDF) this month turned its attention to next year, when it believes that everything will come together with the mid-2013 introduction of the company's new microprocessor--dubbed Haswell. Intel described 2013 as a once-in-a-decade opportunity for companies to reinvent the PC, with its new Haswell microprocessor catalyzing the ultrabook revolution.

Haswell, Intel's fourth-generation core microprocessor family, will offer better performance with lower power consumption. Because of these attributes, Haswell will serve as the main core microprocessor for ultrabooks. The microprocessor will provide Intel Identity Protection Technology to improve security, and will also support multiple displays and high-definition 4K monitors with DisplayPort 1.2.

New Features are Coming, but will they Spark Interest?

Beyond the ultrathin and ultralight form factor, Intel at IDF focused on new consumer-friendly features to enhance the attraction of ultrabooks.

The focus at several briefings centered on touchscreen technology in ultrabooks, in conjunction with the Windows 8 launch in October. Intel at IDF claimed there are 40 ultrabook designs in progress with touchscreens.

The company also provided a survey showing that when consumers are given a choice, touch was chosen as a desired feature 80 percent of the time.

Intel highlighted convertible form factors for ultrabooks, calling them the "best of both worlds."These notebooks with detachable screens work as a traditional clamshell mobile PCs, but they can also be converted into tablets by pulling the screen off the keyboard.

Other prominent new features being incorporated into the next-generation ultrabooks are voice recognition;security features; multiple sensors including GPS, accelerometers and gyroscopes; and hand-gesture recognition, an attractive option for the gaming market.