Intel's Haswell Chips Are Great, But Have You Seen The Prices?

Intel's latest PC processors, collectively codenamed Haswell, are indisputably a big step forward for computing. A number of variants have already proven their mettle in a barrage of independent tests since the weekend, and the emerging consensus is that they're the most powerful and -- more importantly -- the most power efficient chips ever developed for this category of consumer device. However, what we've had so far are largely technological judgments made in the absence of a complete price list, which Intel only made public this morning and which offers a cold dose of reality.

Take the flagships of the range: the 15-watt, dual-core Core i5 and Core i7 destined for Ultrabook-class laptops and hybrids. These are enticing products, because they promise at least as much performance as existing Ivy Bridge Ultrabooks (or the latest MacBook Air), while drawing 5-watts less power and lasting 50 percent longer on a charge -- potentially enough to last a full working day. But the Core i5 version costs $342, while the Core i7 soars to $454. And those are just the bulk prices offered to manufacturers who then need to cost out the rest of the PC.

By contrast, the equivalent Core i5 and Core i7 flagships from last year's Ivy Bridge Ultrabook range (the "U series") cost $250 and $346 respectively, so we're looking at a serious premium for the best of Haswell. Of course, there'll be lower-specced and lower-power Haswell chips at lower price points (not least the Y series), but they won't deliver Intel's central marketing promise of the all-day Ultrabook. There'll also be more powerful versions of Haswell for laptops that promise a doubling of graphics performance thanks to the inclusion of expensive high-bandwidth memory within the chip, but the official price list for those specimens starts at $468 and rises to $657, which is way beyond your regular Ivy Bridge fare.

Anyway, even if we put all this aside and ignore price differences with Ivy Bridge, the fact is that this whole category of processor is starting to seem pricier than it once did, and hence less mainstream.

Let's put things in a broader context: the 15-watt Core i5's price of $342 isn't far off the total end user price of a mobile-class hybrid running Windows 8, like  Acer ’s new Iconia W3 ($380, plus extra if you want a keyboard dock). The Iconia W3 runs off an Intel Atom chip, which consumes so few watts that it doesn't need to be air-cooled, resulting in a much thinner and lighter device that also happens be much, much cheaper. What's more, it'll handle the majority of common computing tasks, including full Microsoft Office (which comes bundled at no extra charge). It'll even run those awkward legacy applications that many small (and large) businesses still rely on, and which have often tended to be incompatible with iPads and other mobile devices.

It's not like Intel is unaware of the shifting landscape; after all, it manufactures the Atom. In fact, it has just revealed at the Computex show in Taiwan that new quad-core Atoms will arrive in $399 hybrids by the end of the year. These will be upgrades to the Iconia W3, and they're exactly what the market needs. With this arguably more important project bubbling away in the background, you have to ask whether Intel actually needed to throw so much money and effort into creating a more efficient and more expensive Haswell, rather than, say, just putting out a cheaper implementation of Ivy Bridge and saving its real energy for Atom. But the company stands by its two-pronged focus:

“The performance advantage you get on a 15-watt Ultrabook versus a fanless laptop is pretty big -- for example with graphics editing," says Intel's Dan Bingham.

"I just don’t think that everyone’s going to want a sub-5W fanless design to do their hardcore compute.”

Bingham is surely right: not everyone will be satisfied with a mobile-class device. Then again, current sales trends suggest most people are. With analysts at IDC having reported a 13 percent decline in PC sales last quarter, and with Gartner conversely predicting a boom in sub-$350 smartphones and tablets by 2015 (reaching over half a billion unit shipments annually), it's impossible to guarantee the size of the premium PC market.

The exact same uncertainty applies to the desktop side of the things, so let's look at those prices briefly too. Haswell's flagship desktop chip, the 84-watt Core i7-4770K, costs $349. Compared with Ivy Bridge, it doesn't add much in terms of power efficiency or general computing, but instead brings improved graphics and gaming. This makes it particularly suited to mains-powered PCs that need to handle 4K output or the lastest games, but which are too small to comfortably fit a discrete graphics card -- such as a low-profile living room PC that goes under the TV.

But why would somebody looking for that type of computer spend $339 on a Haswell component, when similar money (and a bit of patience) would acquire a fully-built, ready-to-rock PlayStation 4 or Xbox One? Both of these consoles use customized AMD chips and memory configurations to deliver graphics and gaming far beyond the ability of the Haswell's integrated GPU, and the Xbox One in particular should amply take care of all mainstream living room needs (it's built on Windows, after all).

Intel insists it isn't too fussed about AMD's rise in the console market, because "console volumes aren't high enough" to have a "huge impact" on its trade:

“From our perspective, the console business has very unique requirements that are not necessarily aligned to the more general computing devices that Intel enables today,” says Bingham.

And that's the nub of it. That's where all the uncertainty stems from. How can Intel consider Haswell to be any more of a "general computing" product than a next-gen gaming console? And how can it be sure that future mainstream customers, being offered improved Atom- and ARM-powered options, won't balk at any sort of computer that costs more than $800 (or even half that)?

There will always be a big niche of users who depend on hardcore computing power and who be willing to cough up a grand or two for that, and Intel serves them better than any other company (and it should continue to do so). But it’s far from guaranteed that those power users will be numerous enough to generate the hundreds of millions of Core-branded sales to which Intel has grown accustomed, and in the expectation of which it presumably developed Haswell in the first place.