PC Makers Fight Back Against Mobile Devices

Updated June 2, 2013, 6:47 p.m. ET

PC Makers Fight Back Against Mobile Devices

By DON CLARK and EVA DOU

Rocked by the mobile-device movement, personal-computer makers and their partners are planning a counterattack that leans heavily on two weapons: lower prices and power consumption.

The companies, gathering for the big Computex trade show in Taiwan this week, are maneuvering to win back consumer spending that has shifted to smartphones and tablet computers by emulating more of those devices’ features and prices.

In one significant thrust, manufacturers plan to begin offering much less expensive laptop computers that have touch screens for tablet-style operation. Prices later this year are expected to drop more than 50% in some instances. Manufacturers are also expected to begin delivering thinner and less costly “two-in-one” convertibles, whose screens swivel or can be detached to operate in tablet or clamshell mode.PC makers are also moving to offer a new wave of their own tablets—particularly small-screen models such as Apple Inc.’s AAPL -0.41% hit iPad Mini, but well below its $329 starting price.

Pushing hard for the reboot are MicrosoftCorp. MSFT -0.37% and Intel Corp.,INTC +0.29% kingpins of the PC era whose growth has been hampered by the rise of mobile devices that use competing technologies.

“The reality is the ecosystem has got to reinvent itself,” said Kevin Turner, Microsoft’s chief operating officer, at an investor conference last week. Microsoft recently began offering hardware makers discounts of as much as two-thirds off the standard price for its Windows and Office software for small portable PCs and tablets, people familiar with the situation said.A goal of the Microsoft program is to hit starting prices as low as $300 for touch-screen laptops—which now typically cost $700 or more—and $199 for tablets with screens 8 inches or less in size, these people said.

Acer Inc. 2353.TW 0.00% of Taiwan is using the trade show to introduce products that include the Iconia W3, which the company says is the first 8-inch tablet to run Microsoft’s Windows 8 operating system. It lists for $379, a price that includes a preinstalled version of Office. Asustek Computer Inc., 2357.TW -0.91% another Taiwanese PC vendor, is also introducing mobile devices at the show.

Another factor is new microprocessors from Intel and rival Advanced Micro DevicesInc., AMD -0.99% including power-sipping models expected to bring the all-day battery life common on tablets to clamshell-style portables and convertibles.

The developments are just the latest sign of the wrenching changes spurred by competition from the likes of Apple and Samsung Electronics Co., 005930.SE +1.04%whose revenues from smartphones and tablets have swelled while the PC market has cooled. Device categories and components are shifting, as companies furiously experiment to grab a foothold in new niches.

“For us, it’s imperative that we move into detachables, convertibles, tablets, ‘phablets’ and phones,” said Gregory Bryant, the vice president in charge of Intel’s Asian-Pacific operations, using a term that refers to devices sized between phones and tablets. “You’ll hear more about these at Computex.” The trade show is scheduled to run from Tuesday through Saturday in Taipei.

For now, competitors can claim momentum and some important advantages. Many mobile-device makers have adopted a combination of Google Inc.’s GOOG +0.05%free Android software and chips from multiple companies that license designs fromARM Holdings ARM.LN -0.70% PLC, which in some cases cost closer to $10 than the more than $100 that Intel historically has commanded.

“Because there are multiple suppliers, the competition is much higher,” said James Bruce, ARM’s lead mobile strategist. “You are going to see a lot more innovation and a lot more devices than if it was just a traditional laptop PC market.”

Already, companies such as Amazon.com Inc. AMZN +0.89% are delivering small ARM-powered tablets at less than $200. Samsung’s ARM-based Chromebook undercuts most laptops running Windows, with a $249 starting point. Others, including Acer, are showing off PCs running Android.

The pressures have caused longtime partners to hedge their bets. Intel ally Microsoft, which is readying a makeover of its Windows 8 operating system after mixed reviews, is also planning a variant for ARM-based tablets and laptops called RT, though few hardware makers have adopted that software so far. “We are still optimistic about RT,” says Anand Chandrasekher, chief marketing officer of Qualcomm Inc.,QCOM -1.09% a big seller of ARM-based chips. “I think it’s still early days.”

Intel, meanwhile, has stepped up efforts to place chips in tablets running Android in addition to devices running Microsoft’s Windows.

Samsung, which designs ARM-based chips for its tablets and smartphones, has selected an Intel Atom chip for at least one model of its coming Galaxy Tab 3 line, a person familiar with the situation said.The development was recently reported by publications that include VentureBeat.

A Samsung spokesman declined to comment.

Intel’s chief focus at Computex is Haswell, the code name for a major overhaul of the company’s flagship chip line that is expected to reduce power consumption by 50%. Hardware makers are preparing thinner, less costly laptops and convertibles powered by Haswell under the Ultrabook moniker, which so far has been associated with premium prices.

But another important thrust is Bay Trail, an energy-efficient update to Intel’s low-end Atom chip line expected to arrive in new hardware later this year. That chip, and AMD chips code-named Temash, are targeted under the Microsoft software discounts aimed at boosting the number of tablets and laptops that can exploit the touch-based interface on Windows 8, the people familiar with the matter said.

Asustek, whose Asustek VivoTab Smart is one of the least expensive full-size Windows tablets, plans to launch other devices running Windows 8—including convertibles— at the show.

Acer already has helped push down touch-screen laptop prices with its Aspire V5 line, which starts at under $400 for a version running AMD’s Temash chip.

“Our quantity of Windows 8 devices with touch in the second quarter is double from the first quarter,” Acer Chairman J.T. Wang said in May. “The growth curve is picking up.”