OEMs call Intel’s Haswell pricing, “Absurd”

You have to pay for that new brand somehow

Intel - logoIntel thinks Haswell is going to change Ultrabooks, but there is one big problem, price. If you recall, they are putting a large chunk of memory on the high end parts, and that doesn’t come cheap.

The idea is simple enough, put a large chunk of slow but wide memory close to the CPU and use it to save lots of power. Take that savings and use it for more GPU performance. The problem is that putting the memory on Haswell is complex, and low yields mean higher prices for the functional ones. On top of that, you have the cost of a complex and bespoke memory type that Intel has made specifically for the project. This all adds up.

Technically complex chips do cost, and if the company making them has a clue about marketing, they will price it in line with the value the device brings. One way to add value to a device is to market it as something desirable, basically to polish a turd. Intel is good at this, their whole iSomethingmeaningless marketing has convinced the not-totally-technical buyer that artificially removed parts are worth paying for to not have removed. They make literally billions by blowing fuses and blackmailing you in to paying them not to. That is marketing.

With Haswell, the ULV part with the Crystallwell memory costs more to make, but not a huge amount more. Think $5 or less for the DRAM, and maybe double that tally for construction losses. For this, Intel is trying to charge OEMs $50-60 on a CPU that already breaks the bank at $225 or so. Several OEMs contacted SemiAccurate recently to complain about Intel’s pricing, one calling it, “Absurd”, and that was the nice one.

Why do they think they can charge this much money? Marketing. Intel is going to make yet another moronic brand for the ULV/Ultrabook versions of Haswell, and make you pay for it. And pay. And pay. The concept worked well when Intel had a desirable product, but now, well, no one wants Ultrabooks, they are not an iPad or MacBook Air.

Ultrabooks are coming in at 1/4 of Intel’s sales projections for 2012, the economy is in shambles, and they are trying to sell fashion against Apple. What could go wrong with a vastly more expensive product in light of this? Intel is quick to counter bad news with specious numbers, but today the first touchscreen Ultrabook that SemiAccurate has seen announced, the Acer Aspire S7 took the price up to $1399. That is not a reduction in price as Intel has been promising. Told you so.

To fix this, Intel is going to jack up the price even more and back it with an ad campaign. OEMs are already balking at the price of Haswell GT3, and most are not yet aware of the additional handcuffs that this will bring. Consumers are not buying at the current prices, and OEMs know higher prices are untenable. Is it any wonder Intel is back to their old ways of strong-arming OEMs if they make a Trinity laptop?S|A

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Charlie Demerjian

Roving engine of chaos and snide remarks at SemiAccurate
Charlie Demerjian is the founder of Stone Arch Networking Services and SemiAccurate.com. SemiAccurate.com is a technology news site; addressing hardware design, software selection, customization, securing and maintenance, with over one million views per month. He is a technologist and analyst specializing in semiconductors, system and network architecture. As head writer of SemiAccurate.com, he regularly advises writers, analysts, and industry executives on technical matters and long lead industry trends. Charlie is also available through Guidepoint and Mosaic. FullyAccurate