Intel, AMD take battle to new ultra-thin laptops

Intel's director of mobile platforms product marketing, Uday Marty, said the company expects 20 percent of its consumer shipments will be for ultra-thins by the end of 2009.

A POTENTIAL PROBLEM

The PC industry, still struggling to recover from one of its worst downturns ever, badly needs more growth drivers.

Acer, the first company to introduce a cheap Intel-powered CULV laptop, expects revenue from that segment to account for 15 percent of its total sales by the end of 2009.

Asustek, which pioneered the netbook in 2007, plans to launch five consumer-priced ultra-thins this year.

But analysts say a surge in this market may hurt already weak revenues for chip makers in the short run. Intel's Atom -- designed for netbooks -- siphoned sales from its pricier chips, a trend analysts say the CULV chip may sustain somewhat.

Atom-powered netbooks begin at around $300, but can cost much more for a designer model. The new ultra-thins cost as little as $500, while notebooks are twice that.

Analysts say chip margins, however, will stay much the same because costs have shrunk as makers fit more chips on a single wafer. Ultra-thins also cost less to make and lower power requires less in the way of cooling.

Analysts say product margins for CULV chips stand in the mid-60s, about the same as Intel's mainstream processors, and above margins for Atom processors, which are about 11 percentage points below average, according to analysts. "It is a difficult thing for revenue and profit... People don't live by profit margin percentages, they live by profit dollars," IDC analyst Bob O'Donnell said. "How do you make up for that shortfall? We think it's through the sale of value-added products such as software and accessories."

IDC does not have shipment forecasts for ultra-thins but is confident they will do well.