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When Apple launched the iPhone in 2007, it revolutionized the smartphone industry. Google followed suit, and the duo now leads the smartphone market.
Similarly, when Apple launched the iPad in 2010, it reinvented the tablet and now dominates the tablet market, with Google coming a distant second. Microsoft entered the smartphone game too late, launching Windows Phone just around a year ago. It hasn’t even entered the tablet market, as Windows 8 is still months away from launch.
The increasing popularity of tablets has led to a decline in the sales growth of PCs and notebooks, the largest markets that Microsoft operated in. Going forward, the growth in overall PC sales is expected to be almost flat, while notebook sales are expected to be slow, as more consumers buy a tablet instead of a notebook. The two companies which could be impacted most by this change in consumer preferences are Microsoft and Intel.
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Check out our complete analysis for Microsoft
Intel has been largely shut out of the tablet market, as most tablets are powered by ARM processors. Microsoft is expected to launch Windows 8 in mid-2012, but its fight for tablet market share will likely be quite tough, given Apple’s and Google’s entrenched position in the market.
Enter the Ultrabook: The saviour of Microsoft and Intel
Intel first announced the Ultrabook in 2011, to make notebooks desirable again. Ultrabooks are stylish, slim, ultraportable notebooks with high battery life and better performance than the current generation of notebooks. They are inspired by Apple’s very popular Macbook Air, which has seen excellent sales.
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Intel even launched an Ultrabook fund worth $300 million, to incentivize notebook manufacturers to create better, cheaper notebooks which can compete not only with the Macbook Air, but also attract customers who are buying tablets.
At CES 2012, Intel and its partners like Dell, Samsung, Lenovo, Acer, Asus and Vizio unveiled a series of ultrabooks, with varying form factors and concept designs. [1] Most of the Ultrabooks will be priced under $1000, and will offer touchscreen displays to combine the functionality of both tablets and notebooks. If Ultrabooks take off, Intel will benefit from increased sales of its processors as the notebook markets dominated by it expands significantly in the coming years.
Microsoft will also benefit by the increased sales, as Windows 8 will be the de facto platform powering Ultrabooks. It is expected to run on both notebooks and tablets with the combination of the standard Windows interface, and the Metro user interface, optimized for touch computing, making it the perfect choice for Ultrabooks.
We expect the global notebook market to expand steadily throughout the forecast period. You can check out the impact of any increase in notebook sales using this widget.
Windows accounts for nearly 25% of Microsoft's $32 Trefis price estimate, while notebook processors account for more than 35% of Intel's $29 Trefis price estimate.
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Notes:
- Intel: More than 75 Ultrabooks coming in 2012, VentureBeat [↩]
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