Intel’s Push for Touchscreen Ultrabooks to Help Microsoft’s Windows 8 Efforts

Microsoft (NASDAQ:MSFT) is set to launch Windows 8, the next version of Windows, in 2012. It is the dominant player in the OS market, where it competes with Apple‘s (NASDAQ:AAPL) Mac OS X and various Linux based distros. Windows 8 will also run on tablets, where Apple’s iOS and Google‘s (NASDAQ:GOOG) Android currently control almost the entire market. Intel (NASDAQ:INTC), which has been sidelined when it comes to tablets, has been trying to get in the market for smartphone and tablet processors, which is controlled almost entirely by ARM (NASDAQ:ARMH). Intel recently announced at an Intel conference that touch-based ultrabooks will be a big focus for them in the coming year. ^[1] Intel is also trying to bring down the average ultrabook pricing to $699, to address a bigger market.

Check out our complete analysis for Microsoft

Windows 8 to greatly aided by Intel’s Ultrabook focus

Windows is one of the main revenue generators for Microsoft. It accounts for nearly 25% of its Trefis price estimate. Windows currently has a 76% share of the operating system market, which we expect will increase marginally in the coming years.

Windows 7, which was released almost 2 years ago, has sold around 500 million copies to date. Windows 8, which targets the traditional PC and notebook market as well as the growing tablet market is expected to sell even more. Windows 8 will run on both Intel and ARM processors. While Intel is trying hard to gain a foothold in the tablet market, it is also trying to increase its dominance in the notebook market with its new ultrabooks, which are slim, fast notebooks modeled after the very popular Macbook Air. It has also launched a $300 million Ultrabook fund, to help manufacturers developing ultrabooks.

Check out our complete analysis for Intel

With the new touch based ultrabooks, Intel is creating a new device category, which combines tablet-like touch-based computing with notebooks. With the ultrabook, Intel is trying to make notebooks cool again. We expect this move by Intel to greatly benefit Microsoft, as it will boost sales of Windows 8 and may even shift consumer attention from tablets to touch-enabled ultrabooks.

Our current $32 Trefis price estimate for Microsoft stands nearly 20% above its current market price.

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1. Otellini: Windows 8, touch-based ultrabooks a pair, CNet [↩]