[Digital Daily] A U.S.-based chip giant Intel is pouring ‘billions of dollars’ to PC majors including Samsung Electronics and LG Electronics as part of its ‘massive subsides’ business scheme to prevent Intel’s ultrabook business from further falling.

As a normal course of business, Intel doesn’t provide co-marketing funds to its major clients. Intel claiming that these funds are not ‘subsides’ nor are they anti-competitive.

But the latest decision by Intel is showing the company’s ‘nervousness’ of weaker sales of Intel chip-embedded ultrabooks in South Korea, Intel officials and analysts said.

“Intel has raised its budget for subsidies to Samsung and LG by 70 percent from a previous 50 percent as initial responses from consumers for ultrabooks aren’t heat as expected” said one Intel official asking not to be named as he wasn’t given the right to officially speak to the media.

“In return, Intel has asked Samsung and LG to promote more ultrabooks using Intel chips. This is a big burden for Intel. But should Intel do because Intel is more than desperate to revive the sagging momentum in ultrabooks in South Korea” said the official.

Park Min-jin(angela), a senior Intel executive in Korea, declined to confirm citing the sensitivity of the issue, however, added it’s been strengthening strategic alliances with the South Korean consumer electronics giants to sell more ultrabooks.

The so-called ‘Intel Inside Program’ represents the first time a PC component manufacturer successfully communicated directly to computer buyers since 1991. The program is one of the world’s largest co-operative marketing programs supported by thousands of PC makers who are licensed to use the Intel Inside logos.

“Simply, Samsung Electronics will get back 7 million won after it sold a ultrabook valued at 10 million won each with the promotion of Intel logo-embedded ultrabook and this is very rare” said an executive from Samsung Electronics requesting anonymity.

For the first time in ten years, the worldwide market for PCs has declined with shipments down 1.4 percent for the fourth quarter of last year. Noticeably, ultrabooks haven’t stemmed the tide.

“Ultrabooks were quietly introduced into the market during the holiday season of the fourth quarter of last year. Ultrabooks didn’t seem to draw consumers’ attention. Consumers had very little understanding and awareness of ultrabooks, and only a small group of consumers was willing to pay the price premium for such models” said Gartner, a leading market research firm.

Samsung and LG Electronics were passive for the promotion of ultrabooks using Intel chips due to business overlaps and Intel’s previous resistance not to hike marketing subsidies, said officials from Samsung and LG Electronics.

“We are applying same marketing promotion strategies to PC makers to promote more ultrabook sales. As far as I know, PC majors will turn more active as awareness for ultrabooks increases but with steadily” said an industry executive.

Intel said the portion of ultrabooks will rise to 40 percent in an entire notebook demand by the end of this year. Gartner said the global shipment for notebooks will reach at 233 million units. “Intel aims to sell over 90 million units of ultrabooks” said the industry executive.

But officials at Samsung Electronics’ semiconductor division and DisplaySearch, another market research firm, aren’t much feat for the growth of ultrabooks this year as the shipments of ultrabooks by PC majors to stall at some 20 million units.

It’s been reported that Taiwan’s leading PC makers AsusTek and Acer have recently cut their targets for ultrabooks by 40 percent as the thinner PCs aren’t receiving favorable reviews from consumers.

powerusr@ddaily.co.kr



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