The PC market's last, best hope

May 14, 2012: 12:20 PM ET

Intel is about to launch a massive campaign touting new thin and light laptops. Will it goose sales?

intelFORTUNE -- Call it an Ultrabook. Call it a Sleekbook. It's still pretty much a wannabe MacBook Air. But for technology behemoths that count on computers like Intel and Hewlett-Packard, the new crop of thinner laptops are the latest attempt to electroshock demand.

Take Intel (INTC). The Santa Clara-based company is the largest supplier of PC chips and, obviously, it'd like to keep it that way. That's why the company is putting all of its marketing might behind Ultrabooks, the latest category of portable computers.

What the heck is an Ultrabook? Intel defines it as a thin, lightweight and low-power laptop -- a.k.a, a slightly cheaper MacBook Air. At its annual investor meeting in Santa Clara, Calif. last week, the chipmaker showed off several of the 20 Ultrabooks currently in production and said there are 110 additional designs in the works. Some of these are so-called "hybrid" designs, including thin laptops that fold to become a tablet or have a detachable keyboard. Intel also showed an oddly designed concept with a transparent touchpad, called Nikiski. Future Ultrabooks will integrate touch, gesture and voice controls, and will have all-day battery life. They're also expected to come down in price, to $699 by end of this year. (Apple's (AAPL) MacBook Air starts at $999.) To make sure these new devices sell, Intel has embarked on its biggest marketing campaign since its Centrino wireless line came out in 2003.

MORE: Can Intel's new chips help sell more PCs?

While there's no denying the effect that the rise of tablets and smartphones have had on demand for PCs, there's still plenty of money to be made from selling computer chips. Intel is hoping Ultrabooks will help get consumers excited about PCs again. Rival chipmakers, including those that have traditionally focused on mobile devices, are also trying to push their products into new, lightweight PCs. Earlier this week Hewlett-Packard (HPQ) unveiled yet another franchise of ultra-thin laptops, called Sleekbooks. These are basically Ultrabooks lacking Intel inside; they run on chips made by AMD (AMD). And ARM Holdings, which licenses chip technology to Qualcomm (QCOM), Texas Instruments (TXN) and others is now making a foray into the PC business as well. Its chips are expected to power some of the upcoming Windows 8 tablets. Ultrabooks running on Microsoft's (MSFT) Windows 8 are also expected out later this year.

Of course, no other chipmaker has quite as much riding on the PC market as Intel. And no rival can match the company's advanced processing technology. Or, for that matter, marketing power. The chipmaker has spent millions of dollars making sure consumers recognize and value its "Intel Inside" logo. Intel also has its history to convince itself it will be successful. Its Centrino campaign had an important hand into dragging PC-makers and consumers alike into the wireless internet era.

What about the new competition? Intel dismisses the threat from ARM. CEO Paul Otellini told investors the company is on track to meet its goal -- that Ultrabooks will comprise 40% of consumer notebook sales by this holiday season. Intel would like to sell a lot of phones and tablets this year as well, but so far that hasn't happened. Despite its advanced technology and brand recognition, the company still hasn't been able to crack the mobile market.

MORE: What Intel sees in will.i.am

Unfortunately Intel had little to share on the mobile front at last week's investor meeting. Mike Bell and Hermann Eul, who now jointly lead the company's mobile communications group, gave an update on the recent partnerships Intel has announced, including with device makers like Motorola and Lenovo. But to date, very few Intel-based phones have actually launched. The company has put a lot of resources on its mobile efforts. It has about 1,200 engineers dedicated to optimizing the Google (GOOG) Android mobile operating system for Intel architecture. But it's far from proving it can be a real player in mobile.

For now, it's clear Intel is putting its focus on Ultrabooks, though it has said it is determined to be a leader in smartphones as well. So what does that mean? Get ready to see a whole lot more will.i.am. And, maybe, many more Ultrabooks.

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About This Author
Michal Lev-Ram
Michal Lev-Ram
Writer, Fortune

Based in Silicon Valley, Michal Lev-Ram covers enterprise and mobile technologies for FORTUNE. Prior to joining FORTUNE, she wrote for CNNMoney, Fast Company, Popular Science and other business and technology publications. She was also a staff writer at Business 2.0 and holds a B.A. in journalism from San Francisco State University.

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