Though Advanced Micro Devices will not be inside branded ultrabooks, it is making a play for that market. Will consumers care which chipmaker is inside?

The quick answer: yes, if you’re price sensitive. “They’ll come into a market behind Intel and then do what they do at a lower price,” said Deron Kershaw, an analyst at Gap Intelligence.

Ultrabooks are skinny, light laptops that attempt to combine the portability of a tablet with the productivity of a laptop.

How low can AMD-based systems go? “Our…solution will enable a full featured, high-performance user experience well below $1,000 (US). Look for offerings (systems) around mid-year,” said an AMD spokeswoman in response to an e-mail query.

So, what does “well below” mean? Kershaw thinks some AMD systems could go as low as $500. If that happens, AMD would undercut the least-expensive Intel systems at mid-year by about $200. Indeed, Hewlett-Packard has been marketing a popular AMD-based Pavilion dm1z ultraportable for a couple of years (see image above), showing that decent AMD-based systems can be very inexpensive.

AMD’s Ultrathin technology will compete with Intel’s ultrabooks. 

(Credit: Advanced Micro Devices)

As a yardstick, Toshiba will bring out a new Satellite series of Intel-based ultrabooks later this year targeting an entry price of $699–or possibly lower. (Toshiba’s Intel-based Portege Z835 ultrabook has been on sale at Best Buy for $799 and has dipped occasionally to $699.)

Of course, not all AMD systems will compete with Intel in the lowest price ranges. More full-featured designs will be priced accordingly. “AMD certainly brings more to the table than low cost,” the AMD spokeswoman said.

That includes graphics processors (see image above) that typically out perform Intel’s graphics solutions–though AMD’s CPU (central processing unit) performance lags Intel. And AMD may have a tougher time in the future making the argument for faster graphics, as Intel devotes more and more resources to improving graphics and multimedia processing on its chips.

In the end none of this branding may even matter that much, however. Ultimately, ultrabooks and ultrathins will be the mainstream. And we’ll be back to the same age-old Intel-AMD rivalry. Oh, and throw Texas Instruments, Qualcomm, and Nvidia into the mix too when PC makers bring out Windows 8 designs with ARM processors from those companies inside.

How low can ultrabooks go? How about $699.

Toshiba ultrabook is priced at $699 this week at Best Buy.
(Credit: Best Buy) 

How low can ultrabooks go? How about $699.

Let there be no doubt that Toshiba is setting the pace for ultrabook pricing so far. After debuting at $799 last month, the Portege Z835 is now down to $699 at Best Buy.

“They have a $200 instant rebate this week that brings it down to $699. I think it’s surprising. It could be to spur sales. It could be to get people’s attention. But it’s a smart move and by far the most affordable ultrabook option right now,” said Deron Kershaw, an analyst at Gap Intelligence. (Note that the $799 price only lasted for about a week when Toshiba introduced the Z835 in November. For the most part, it’s been priced at $899–thus the $200 discount.)

The only major rivals even close right now are Acer’s Aspire S3, which is priced just under $900 at Best Buy, and Hewlett-Packard’s Folio 13, priced at $899.99.

Ultrabooks, for the uninitiated, are ultralight Windows laptops that compete with the increasingly popular, and more expensive, MacBook Air.

An Intel display promoting ultrabooks at Office Depot.
(Credit: Gap Intelligence) 

Specifications for the Toshiba ultrabook include a 2nd Generation Intel Core i3-2367M processor, 4GB DDR3 memory, 13.3″ LED-backlit display (1366×768), 128GB solid state drive, three USB ports including one USB 3.0, and backlit keyboard. The Z835 weighs 2.5 pounds, measures just 0.6 inches thick, and has magnesium alloy casework.

And Intel is doing its part to drive ultrabook sales, according to Kershaw. Promotional displays–referred to as “end caps”–have popped at Office Depot this week (see photo).

“It’s different from the other displays that we’ve seen. It’s pretty unique because it says ‘Intel Inside’ in huge letters at the bottom. So, my thinking is that it makes it easy to funnel in a few different products from different manufacturers and put them on the display,” he said.

Acer has set pricing for its forthcoming S3 Aspire ultrabook at $899.99, making it the first vendor to break the $1,000 price barrier in the U.S. market.

New Age Electronics, the consumer electronics division of distributor Synnex (NYSE:SNX), is currently listing the product for its retail customers at the $899.99 price point, a Synnex spokesperson confirmed Tuesday.

The sub-$900 pricing is expected to start a price war in the burgeoning ultrabook market, where rivals Lenovo and Toshiba have already unveiled models with prices starting at $1,200 and $1,000 respectively. Acer rival Asus hasn’t yet announced pricing for its X21 and X31 ultrabooks.

“The low price sends a clear signal that Acer intends to compete with Asus for the opening price point,” said Deron Kershaw, a notebook analyst at Gap Intelligence, a San Diego-based research firm.

Kershaw said Acer’s move may cause Asus and other competitors such as Hewlett-Packard (NYSE:HPQ) to match the $899 price point in the U.S. market.

The $899.99 price tag is also roughly $200 less than what Acer is charging for the product in Europe.

The ultrabook category represents a new class of product aimed at stealing thunder from Apple (NSDQ:AAPL)’s MacBook Air ultralight notebook, iPad and other offerings in the fast-growing tablet space.

Acer, for its part, isn’t saying whether this pricing information is accurate. “We do not confirm this price and will not disclose local configurations or pricing until it becomes available locally,” an Acer spokesperson said in an e-mail.

The company didn’t reveal U.S. pricing when it unveiled its first ultrabook, the S3 Aspire, earlier this month at the IFA consumer electronics trade show in Berlin.

Synnex’s e-commerce partner portal, ECExpress, currently includes a cryptically worded New Age Electronics listing for an unnamed $899.99 Acer product with a 13.3 inch display, an Intel Core i5-2467M processor and a silver body, all of which are featured in the Aspire S3.

Click image for full-sized view of Synnex ECExpress screenshot.

Intel (NSDQ:INTC) began promoting the Ultrabook concept in May at Computex in Taiwan, using it to define laptops that meet strict specifications for form factor and performance. In Intel’s view, ultrabooks must be thin, boot up quickly and support extended battery life, with pricing in the $1,000 range.

However, some early ultrabook entrants’ offerings haven’t met this pricing bar. Lenovo’s IdeaPad U300S Ultrabook will ship in mid to late October for a starting price of $1,200 and Toshiba’s Portege Z830 Series Ultrabook will launch in November with initial pricing under $1,000.

The unit is expected to become available within the next two weeks, sources familiar with the situation told CRN.

By Deron Kershaw, Notebook market analyst

Consumers in the U.S. aren’t buying as many laptops as they used to so vendors and retailers are responding the best way they know how … by lowering prices. Scan the notebook assortment at most major retailers and you’ll get the sense that the holidays have come early. Sale prices that were previously reserved for Black Friday are now becoming a regular occurrence. Best Buy, Walmart, and Fry’s Electronics have offered 15-inch laptops for as low as $259 in recent weeks. The aggressive pricing is no longer limited to a handful of vendors, as many of the top manufacturers are now competing for the opening price point.

During the first half of the year, the average selling price (ASP) of notebooks (excluding netbooks) in the brick-and-mortar retail channel (Retail) dropped by over $100, from $755 to $653, according to Gap Intelligence data. Notebook prices in the online channel of brick-and-mortar retailers (Retailer Online), which offers a larger proportion of better-equipped and more expensive options, has seen comparable price declines over the same period.

From April to July of this year, notebook prices dropped 7.7 percent in the Retail channel and 7.5 percent in the Retailer Online channel. Last year, during the same period, prices dropped just 4.9 percent and 3.7 percent, respectively.

The drop can be attributed to a variety of factors:

• The economic slowdown in the U.S. continues to sap or delay consumer demand for PCs.
• The rise of tablets has delayed laptop upgrades. Not coincidentally, the current $650 price floor for laptops is close to the generally accepted price ceiling for tablets.
• As the netbook market dies off, manufacturers are looking for lower-cost full-sized laptops to serve as their entry-level offering. Most of the models are equipped with AMD’s new low-priced Fusion processors, which integrate the graphics and processing on a single chip.
• Beyond the immediate trends, the laptop market is simply a mature category that has seen increased competition from a wide range of manufacturers.

Despite the price declines, there is still a large number of premium laptops available to consumers. Due to cyclical pricing trends, laptop costs are expected to increase slightly in August before dropping again in September and October. The holiday refresh in November and December should see prices increase again before retailers offer heavy discounts. Manufacturers are also expected to launch higher-priced ultrabooks in the fourth quarter, which should serve to boost average selling prices (ASPs) as vendors attempt to stop the slide. As with any technology market, the largest vendors will continue to use their manufacturing scale to reduce prices. The big winners, of course, are consumers, who continue to get better laptops for better prices at a faster rate.

Deron Kershaw is a notebook market analyst for Gap Intelligence, a San Diego-based independent technology research firm with emphasis in helping product manufacturers and retailers understand current market trends in order to respond to customer demands.