Firm raises stake in joint marketing campaign
By Cho Mu-hyun, Kim Yoo-chul
Intel Korea has substantially raised the percentage of its outlay in its joint marketing campaign with partner manufacturers in a desperate bid to promote its ultrabook notebook computers, according to industry sources.
The world’s largest semiconductor maker runs a joint marketing program called Intel Inside in which they co-fund projects with manufacturers such as Samsung and LG Electronics.
The program, which started in 1991 globally, sees Intel and a partner company each pay 50 percent for promotional campaigns at all of Intel’s subsidiaries worldwide, including in Korea.
According to sources contacted by The Korea Times on Tuesday, they said the global semiconductor giant is pushing ultrabooks harder than other products, offering to pay 70 percent for marketing costs while manufacturers put in the remainder.
The increase in spending has led Intel to gain a bigger share in the local ultrabook market.
The portion of ultrabooks in the entire local notebook market passed 25 percent in May, this year due to increased funding from Intel to manufacturers.
The officials said Intel is going to release an upgraded ultrabook model using advanced 22-nanometer CPU technology by the end of this year and added it was confident to keep the current leads in ultrabooks here by giving more financial supports to its partners.
Manufacturers receive support for marketing if they follow the guideline given by Intel on ultrabook designs. This includes specifications on thickness, screen size and placement of the Intel logo sticker on ultrabooks. If manufacturers follow the given instructions carefully, Intel supports them through funding.
Intel Korea spokeswoman Park Min-jin declined to comment on whether the company is paying more for ultrabook promotions.
However, she did admit that the 50:50 ratio was not absolute saying, “The proportion of payment for a marketing project between Intel and a partner is circumstantial and subject to change.”
She added that Intel Inside was a global program, and that if a certain policy change in Korea occurs, it is highly likely that the standard is being applied worldwide.
Officials at Samsung and LG, Intel’s key business partner, told The Korea Times that their recent product releases are due to more marketing funds from the U.S.-based chipmaker, though they declined to unveil more details on the issue.
Intel has been betting hard on ultrabooks, first revealed globally in June, 2011, at industry forum Computex in Taiwan. Domestic sales started in December last year. They are aimed at taking on Apple’s MacBook Air.
Their main promotion tagline is the relatively small size, closer to a tablet than a standard laptop, and being less than 2.1 centimeters thick and weigh under 1.5 kilograms.
Intel Korea has partnerships here with Samsung, LG and the local offices of global companies Hewlett Packard, Toshiba, Lebano, Acer Group and ASUS.
Manufacturers started new promotions at the end of May and in early June, speculated to have come from Intel’s higher payments for joint marketing.
According to Gartner, Intel is still the undisputed No. 1 in global semiconductor revenue with a 16.5 percent market share for 2011. Runner-up Samsung has 8.8 percent. However, Intel’s other areas of business are not fairing as well.
Personal computer and notebook markets are experiencing setbacks due to the rise of smartphones and tablet PCs. All related businesses are adjusting to the new atmosphere.
According to Gartner, the computer business will grow a mere 4.5 percent from last year. Analysts say that the growth pace will depend on how consumers will respond to ultrabooks and Windows 8.
Notebook manufacturers are receding from hard-line marketing on laptops due to their negative prospects, while investing heavily in smartphones and tablet PCs.
Intel stated early in the year that it expects ultrabook to hold 40 percent of the global notebook market share. Gartner predicts that 233 million notebooks will be sold this year.
“It is usual for manufacturers and content or chip providers to carry out promotional marketing separately,” said an industry official, who declined to be named.
“It is hard to say for certain, but in many cases, joint marketing reflects the difficulty of either party or both.”
In February, manufacturers simultaneously decreased the prices of their ultrabook line-ups. They had set prices higher than Intel’s initial suggestion of under $1,000, but later lowered them due to poor sales.
Besides ultrabooks, Intel also started producing smartphones in April in an attempt to diversify its portfolio, and is distributing the new model in India and China. It is yet to be released in Korea, but the launch is expected this year.