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Why Intel is pressed to go as far down as to $99 with its Android tablet prices (but not with Windows 8.1)?

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There is a typical misunderstanding from reports like Intel says get ready for $99 tablets, $299 Haswell notebooks, $349 2-in-1 hybrids [ZDNet, Oct 16, 2013] that those rock bottom prices ($99+) will apply to Windows 8.1 tablets as well. This is very far from the truth both from possibilities and business rationale point of view for the company. 

From: Intel’s CEO Discusses Q3 2013 Results – Earnings Call Transcript [Seeking Alpha, Oct 15, 2013]

During the holiday selling season, you will see Atom SoCs and tablets as low as $99, and in 2-in-1 systems as low as $349.

David Wong – Wells Fargo

Thanks very much. Bay Trail. If I’m not mistaken there are Android tablets using Clover Trail+ the currently available, when might we expect Android tablets using Bay Trail in the market?

Brian Krzanich – Chief Executive Officer, Director

You are absolutely right there, several tablets out there currently today with Clover Trail+ using Android. What I told you was, there are about 50 designs on Bay Trail, about 20 of those are 2-in-1s, probably 25, 20 of them are Bay Trail tablets on Android, there is going to be about eight systems on shelf, eight to 10 systems on shelf, we believe, by the say Black Friday timeframe. Most of those will be Android tablets.

Intel plans cheap Bay Trail CPUs for 2Q14 [DIGITIMES, Oct 14, 2013]

Intel is planning to release entry-level Bay Trail-based processors for the Android platform in the second quarter of 2014, according to sources from tablet players.

The sources expect the CPUs to be priced between US$15-20, about US$12 lower than the current models.

Although Intel has already offered subsidies for its Bay Trail-T processors including Atom Z3740 and Z3770 at US$32 and US$37 and another 10% off for bulk purchase, they are still less competitive in pricing compared to ARM-based quad-core processors.

With the new entry-level processors, the sources expect Intel to gain an equal footing against players such as Mediatek, Qualcomm and Nvidia.

AND WHY “This [$99+ Windows 8.1 tablet] is very far from the truth both from possibilities and business rationale point of view for the company”?

Here are the clues from Intel’s CEO Discusses Q3 2013 Results – Earnings Call Transcript [Seeking Alpha, Oct 15, 2013]

During the third quarter, our revenue grew 5% sequentially and was flat versus the third quarter of 2012. Year-over-year PC CPU volumes declined slow and were offset by solid growth in the data center and enterprise. While consumer demand in emerging markets was sluggish, we started to see early signs of improvements in North America and Western Europe. I see our performance in this environment as evidence of an increasingly broad and diverse product portfolio. I would like to highlight a few of the most important results from the quarter.

Following the launch of Ivy Bridge EP and the Atom-based Avoton SoCs, the data center group, delivered all-time record revenue. DCG saw strength across its lines of business in geographies. Cloud revenue was up 40% year-over-year. Storage was up 20% and high performance computing was up 27%. Even traditional enterprise servers were up a bit over the last year on the strength of our MP product line.
While the data center group’s results demonstrate some of Intel’s core capabilities, we saw strong performance beyond DCG. Our embedded business grew 21% year-over-year, reaching an all-time record for revenue driven by communications infrastructure, transportation, the internet [of] and retail. Embedded revenue is well on its way to a double-digit growth year.
Just a few weeks ago, we announced our newest product family, Quark, an ultra low power and low cost architecture. And while any significant revenue impact is some time away, the architect and the speed with which we are bringing it to market are evidence of the changes we are making to ensure we are in a better position to lead and define technology trends moving forward.
Finally, our NAND business grew 20% over last year. As enterprise and data center customers increasing use of high-performance SoCs have put this segment on a path to double-digit growth for the year.

(See also The long awaited Windows 8.1 breakthrough opportunity with the new Intel “Bay Trail-T”, “Bay Trail-M” and “Bay Trail-D” SoCs? [‘Experiencing the Cloud’, Sept 14-26, 2013] for how much the current Bay Trail is priced for the overall Windows market (not only tablets) where prices are much higher than on the Android market).

The current Android tablet offers from Intel based on Clover Trail +:

You will see that with current Clover Trail + Android tablets there is a clear performance disadvantage against the ongoing quad-core ARM Cortex-A9 Android tablets which are also priced much lower than the upcoming $149.99 and $179.99 Android tablets from Dell. From pricing point of view compare that even with that of Amazon’s move into overall leadership: Kindle Fire HDX with Snapdragon 800, “revolutionary on-device tech support” (Mayday), enterprise and productivity capable Fire OS 3.0 forked from Android 4.2.2 etc. PLUS a significantly enhanced, new Kindle Fire HD for a much lower, $139 price [‘Experiencing the Cloud’, Sept 27, 2013], not to speak of the Chinese whitebox tablets costing even less than the new Kindle Fire HD at around $100.

Android tablet user experience [ARMflix YouTube channel, Oct 10, 2013]
ARM Quad core Cortex-A9 @1.4GHz vs. Intel Dual core Clovertrail+ @1.6GHz

Performance comparison of two Android tablets (ARM-based vs. Intel-Based) with same size screens using a real application rather than a synthetic benchmark. A Top 10 Android 3D Game (same version) is launched on both tablets and shown in real-time. Performance differences are highlighted throughout.

So there are Dell Venue 7 and 8 Tablets [Dell YouTube channel, Oct 15, 2013] to capitalise on the well know and aceepted Dell brand name with higher prices:

Stay connected with Venue 7 and 8 tablets featuring fast Intel processors and easy to use Android OS.

for which Dell says on its Coming Soon: New Dell Venue Tablets [Oct 2, 2013] campaign page:

Dell Venue 7 & Venue 8: The tablets that draw a crowd.
Dell Android tablets combine the power of Intel® with compact connectivity, featuring a 7″ or 8″ HD screen with wide-angle viewing and both front and back cameras. Available in October.

High-def details:
Enjoy every detail in high resolution on a 7″ or 8″ HD display screen for sharing your favorite photos, playing games and more.

All-access apps:
Whether you’re looking to relax or be productive, the Android-based platform means you have access to thousands of Android apps.

High-performance processor:
Expect speed with 4th Gen Intel® Atom™ processors for maximum performance.

From Dell Introduces New Line of Tablets and Updated XPS Laptops: Create, Share and Access Content from Virtually Anywhere [press release, Oct 2, 2013]

The Dell Venue 7 and Dell Venue 8 feature Intel Atom Z2760 (“Clover Trail”) [Z2560/Z2780 Clover Trail+ – see below] processors

Availability and Pricing

The Dell Venue 7, Venue 8, … will be available from October 18 on www.dell.com in the United States and select countries around the world.

  • Venue 7: $149.99
  • Venue 8: $179.99

Links to click: Venue™ 7Venue™ 8Z2560Z2580 –  Clover Trail +

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