High PC prices hindering industry recovery, analysts say

Customers are not willing to pay for high-priced ultrabooks with Windows 8

Samsung has launched an ATIV Book 9 Plus laptop with Intel's latest Haswell chip that will be available for $US1400, but analysts said such sustained high prices for laptops and ultrabooks could hinder the recovery of the PC market.

PC shipments are already in a steady decline with the growing adoption of tablets, and buyers are not yet willing to pay a premium for machines with Microsoft's Windows 8, analysts said. Most of the new laptops with Haswell chips, including Toshiba's latest Satellite laptops, are priced above $800, and buyers at this point are only willing to pay a premium for Apple products.

"The thought that you can sell a $US1400 notebook is ridiculous. The mess is partly credited to Windows 8," said Roger Kay, president and principal analyst at Endpoint Technologies Associates.

Most of the Haswell laptops are still priced at $800 or more, with a few exceptions, like Dell's Inspiron 15R, which is priced at $599 after a $300 discount. Intel has said it hopes to bring the ultrabook prices to under $600 by the end of this year, though the processor type in those laptops has not been specified. It is likely that sub-$600 ultrabooks will have the older Intel Core processors code-named Ivy Bridge, as has happened in the past when other older processors were used in less-expensive ultrabooks.

Laptop prices have stabilized and may even go up slightly because PC vendors are trying to position laptops as a premium product compared to tablets, said Mikako Kitagawa, a principal research analyst at Gartner.

"In general, many vendors stay away from the low-priced market and secure better margins on the mid- to high-end laptops," Kitagawa said.

The back-to-school season usually results in a price drop for laptops, and some reasonable deals are available on laptops from companies like Acer, Dell and Asus. But those have low-end processors from Intel or Advanced Micro Devices, and while those laptops are good for basic productivity and Internet activities, they are competing with cheaper tablets increasingly capable of handling those tasks, Kay said.

The premium ultrabooks such as Samsung's Ativ 9 Book Plus have high-resolution screens, solid-state drives and other high-end features, which are more expensive. Because such components can be expensive, companies try to upsell products for a higher market, Kay said.

But in a slumping PC market, it defies logic that companies are rolling out expensive Windows 8 laptops.

"In their bones they don't get it," Kay said. "They refuse to deal with the reality of what's going on."

At this point the margin pressure on PC makers is too high, and some of them don't want to break their necks on pricing, said Charles King, principal analyst at Pund-IT.

Lower volume but higher price is OK with some PC makers, King said.

"Intel has been working both internally and with other component makers to bring unit price -- touchscreens and other -- to the point where OEMs can build and make a profit on PCs," King said.

Intel has just started shipping its latest fourth-generation Core processors code-named Haswell. Until the chips start shipping in volume, there may not be a break in laptop pricing, King said.

Agam Shah covers PCs, tablets, servers, chips and semiconductors for IDG News Service. Follow Agam on Twitter at @agamsh. Agam's e-mail address is agam_shah@idg.com

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Agam Shah

IDG News Service
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