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Why Intel's Ultrabook Play Makes Sense

Stocks in this article: INTC AAPL

TAIWAN ( TheStreet) -- Intel (INTC), in the face of stiff competition from Apple's (AAPL) iPad, is putting its faith in a new breed of light, super-skinny laptops that it has labeled Ultrabooks.

Previous attempts to create new mobile product categories by Intel, Microsoft (MSFT) and Qualcomm (QCOM) have proved problematic, although experts think that the chip giant's latest move is a sound one.

Intel's decision to champion super-skinny laptop/tablet hybrids is a shrewd move, say analysts.

"I think it's the best shot for Intel ," Rob Enderle, principal analyst of Enderle Group, told TheStreet. "They are never going to build a better iPad than Apple, so why not build a better 'something else'."

Intel outlined its plans to build low-power chips for Ultrabooks at the Computex show in Taiwan on Monday, boldly predicting that the devices will account for 40% of the consumer laptop market by the end of 2012.

The tech bellwether says that Ultrabooks will combine notebook and tablet features within a "thin, elegant" form factor which is less than 20 millimeters (0.8 inch) thick.

Intel, however, has been down this road before. CEO Paul Otellini cited supper-skinny laptops running low-power chips as a key trend more than 2 years ago, although lofty price tags hindered adoption of the technology. Now, though, the chip giant says that the new breed of Ultrabook devices will be priced below $1,000.

"I think it's an important segment," Doug Freedman, an analyst at Gleacher & Co., told TheStreet. "I think it's a second attempt by Intel at a consumer ultra low voltage product."

Based on the second generation of its Core processors, Intel says that the first of the ultra-thin notebooks will be available in time for the 2011 holiday season. These will include Asus' UX21 Ultrabook, which was showcased by Asus chairman Jonney Shih and Intel executive vice president Sean Maloney at Computex.

"Apple is pushing Intel into this next wave of mobile computers that is thinner and lighter than we have ever seen before," said Enderle. "It's forcing Intel to make their product more energy-efficient so that it can fit into these small form factor machines."

The analyst said that Intel's recently-announced '3-D Tri-Gate' transistors will play a key role in this effort.

The transistors, which Intel has heralded as its most significant announcement of the year, come at a time when the number one chipmaker is under increasing pressure from ARM Holdings' (ARMH) low-power technology.

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