Right on cue, the Windows 8 OEM and CPU storm clouds gather

Digitimes is reporting that Notebook vendors are having some trouble meeting Windows 8 hardware requirements in a cost-effective manner.

Since Ultrabook prices are still unable to drop to a desirable level, while notebooks that feature Windows 8 are likely to increase in costs due to Microsoft greatly promoting the software’s touchscreen capabilities, while the software will continue to remain at a high price , PC vendors are currently facing great pressure as strong demand may not emerge as they originally expected. The sources pointed out that Intel is not willing to sacrifice its profits to reduce CPU prices, while PC brand vendors, facing operational difficulties, are also not willing to sell their products at losses, while notebook ODMs are already weak in profitability; therefore, even though ultrabooks are expected to greatly boost consumer demand, plans can only be postponed to a later time.

This is Apple’s competitive advantage over Microsoft – control of the hardware. Microsoft vendor partners are in a tough spot with this one. Create sexy, sleek powerful, touch enabled hardware at low prices – an awful position to be in. Since the vendors are all competing with each other, it’s hard for each of them to achieve the economies of scale necessary to lower the costs of these components for their Ultrabooks. You also have to throw in the fact that this is a new concept (touch screen Ultrabooks) so it’s not a certainty that consumers want to use their fingers with a laptop. So now the vendors are faced with a hellish choice:

1. Spend tons of money to subsidize these units and hope that they will catch fire or
2. Build the units at cost+profit KNOWING that they will sell less units

I’m not sure what the right decision is. Consumers will pay for perceived value ( Macbook Pros etc ) but it will be hard to justify $1500 to $2000 Ultrabooks. Especially in light of the fact that many of those vendors already sell Ultrabooks in the $499 to $799 range. What do you guys think?]]>