Intel’s Q3 looks to ultrabooks as opportunity, adds jobs
When Gartner and IDC both recently noted slowdowns in their respective estimates for PC sales, a cold shiver went through many spines in the electronics industry. Yet Tuesday afternoon, Intel, a bellwether for electronics and semiconductors, announced Q3 results that beat estimates and included a 22% year-over-year increase for PC client group revenue.
Q3 was Intel’s most profitable quarter ever with net income of $3.7 billion, up 24% year over year, and record revenue for the company of $14.2 billion, up 28% on Q3 2010 and up 9% sequentially. The outlook for Q4 looks good, too, with Intel estimating revenue of $14.7 billion, plus or minus $500 million.
As proved by Intel’s numbers, tablets have not killed the PC market - but the market is certainly changing (again).
Executives were justifiably optimistic on the Intel Q3 call with analysts and put much focus on “ultrabooks,” thin, light, sub-$1,000 notebooks that Intel is beating heavily on. The first generation of ultrabooks are expected to market for the holidays and, said Intel’s Paul Otellini during the call, “This is just the beginning. Over the next two generations, we expect that ultrabooks to evolve to include features like touchscreens and always-on, always-connected capability, all at mainstream price points. With more than 70 designs in the pipeline, we are excited about the future of ultrabooks.”
Analysts at FBR Capital Markets have stated that ultrabooks may be mainstream notebook PCs by 2016 and could help Intel push back against competition from the likes of ARM and tablets. “We think ultrabooks could transition into the notebook of choice for PC makers, allowing them to compete better against the Apple iPad,” the market analysis company said in a report this week. “We think ultrabooks can ramp to 50% to 70% of notebooks over time, though we forecast less aggressive penetration rates of 15% in 2013, 26% in 2014, and 41% in 2015. This drives ultrabook shipments beyond 150 million units in 2015, helping Intel stave off the competitive threat of Windows on ARM (WoA) notebook PCs and ARM-based tablets. Intel seems a ‘winner’ here as ultrabooks somewhat successfully combat share losses to tablets and ARM-based notebooks.”
There are concerns from some industry watchers that ultrabooks will fall to the wayside as netbooks have in terms of consumer buys. There are also concerns that ultrabooks will push ASPs (average selling prices) so low that the netbook “cannibalization” affect will occur, with IC makers merely eking out profits, if any.
These concerns were touched on during the call. Stating that the company’s plans for ultrabooks presume mainstream price points, Otillini said that although ultrabooks are around $1,000 this holiday season, “a year from now, you’ll see them at [around] $699 and up. At those price points, there’s plenty of room for Intel’s Core processor family to be in there. As the form factor comes down, Intel’s building materials in these ultrabooks has a chance to go up — integrated graphics is used more often than not, solid-state drives will be used more often than not. And then, around the ecosystem, thin costs more today. A lot of the component, not necessarily chips, but the other things like the touchscreens or the batteries or the low profile hard drives or solid-state drives cost a little bit more. What Intel’s $300 million ultrabook fund is aimed at is really accelerating the volume price points through volume commitments and investments for those components such that the industry can’t collectively hit those price points.” He continued to say that thought has been put into how to get volume and profitably at the same time.
You can get the full Q3 results and a link to the call here. One more item of note from the Q3 statements was the fact that Intel has added approximately 17,000 jobs in 2011 so far, some 3,400 of which were added during the quarter, putting the company’s total employment at just under 100,000. True, 3,400 jobs doesn’t make up for all of the tech jobs lost since 2008, but the climb toward 100k headcount is a significant milestone for Intel and noteworthy in an economic climate that continues to see near-double-digit national unemployment rate in the US.
What are your thoughts on ultrabooks? Are they just shined up netbooks or a considerable PC form that will help Intel battle the competition? Share your thoughts on PCs, Intel’s Q3, or the job additions below.
Maralynn commented:
There's nothing like the rieelf of finding what you're looking for.
Carlos commented:
Similar to WiMAX, Netbook has its technical and busienss values but there will be little market adoption.
Intel must moves up from laptop to ultrabooks with reasonable price range.
Tablets are huge market with Android behind. I hope Intel to reconsider its business strategy: Time to shutdown and dedicate resource and expertise behind Android 4 with huge apps and growing ecosystems: to sell more Intel chipsets.
Here is Catch-22: Apple is a primary concern. Intel management must walking a fine line and I hope Apple to understand.
Practical_Man commented:
Touch screens are are a nice shiny technology, but to accomplish anything with precision and ease, we still need a mouse or touch pad with buttons to select and insert text and access all the "right-click" options. Let's not throw away function for glitz!
pp commented:
MacBookAir is Intel's first sucess in Ultrabook space. Fo those who don't know there is an Intel inside every MacBookAir without a sticker outside.
ARM should takeover MacBookAir before it tries to enter Untrabook.
Out of those 17K jobs most are from Macafee, Infenion and alike
BobUrUncle commented:
Ultrabook (aka MacBookAir). Apple is trying to cost reduce it to $799. Will wipe out the competition in this space. Who needs MS crappy OS. Intel would be wise to work with Apple. Apple seems to be only company out there with some vision. Not a Apple Fanboy, but impressed with their success. Other companies need to step to the plate. Stop selling half-baked, flaky products. Innovate! Hire a few goddamn engineers in America for god sake. If your market is America -- hire Americas!
squamby commented:
What you have described i the Toshiba Thrive with the exception of the pen. But you can buy a pen stylis if you wish. All other capabilities are there.
Bilkentli wrote:
I wish to have ipad-like tablet or laptop with these additional capabilities;
- A pen to take handwritten notes,
- Have full Turkish keyboard (or keys can be assigned freely)
- PC-like folders that all programs can access,
- Capability to access and organize the folders from the PC
- USB port to connect memory, etc,
- A light version of MS Office+OneNote or similar,
- No need to be so thin,
- Instant on capability
amx commented:
Assuming that the numbers have not been fudged (mind you last year was pathetic anyway), intel should work really hard to catch up on ARM.
I personally would unlikely fork out any money on a windows based ultrabook (yes, it is intel's wording for tablet with/out a keyboard).
If I seriously need a windows system for some work related stuff, or a linux one for really serious work, then I wouldn't buy neither of these toys.
However, we cannot judge the consumer market (average Joe needing to browse and send short message on facebook and tweet) by professional use cases. Yes, there may be a small fraction of people who may do some work on small form factor compute devices.
So it really comes to marketing for the masses and convincing them that they need an intel powered ultrabook, not an ipad/android tablet running on ARM. Good luck!
I am sure a lot of the cool $14.2b will be happily received by TV channels showing "intel inside" ads.
Bilkentli commented:
I wish to have ipad-like tablet or laptop with these additional capabilities;
- A pen to take handwritten notes,
- Have full Turkish keyboard (or keys can be assigned freely)
- PC-like folders that all programs can access,
- Capability to access and organize the folders from the PC
- USB port to connect memory, etc,
- A light version of MS Office+OneNote or similar,
- No need to be so thin,
- Instant on capability
ALS commented:
I hope it happens sooner than later! The iPads are nice entertainment toys. I can not do what I need to get done in business with what is out there now but the size/weight and battery drain is very nice on the toys.
tbonthego commented:
Ultrabooks, if executed correctly, seem to me to be the solution for a lot people. I need a tool to do my day to day work, for me, I need Windows others could use Linux, and if the same "tool" can change its spots and become a personal part of the remainder of the day then all that really remains is to is create the software environment to allow the ultrabook to fill both needs. Dual booting Windows / Linux during the day while running Android at night would make this device a winner for many people that can't be bothered with the care and feeding of yet one more device.
Scratchy commented:
ultrabooks...to include features like touchscreens and always-on, always-connected capability. Hmmm, isn't that a tablet??? What't the differentiating factor? If intel then ultrabook else if ARM then tablet?
jay_mon commented:
actually, Intel's head count went from ~88,000 to 97,000. They have hired allot this year. And with those earning numbers, they can afford to hire more.
rpcy commented:
Where were those jobs? Mostly not in the U.S., right?
Pedantic Reader commented:
"thin, light, sub-$1,000 notebooks that Intel is beating heavily on" -- Those UltraBooks will need to be rugged, too!
