Intel's Marketing Machine Might Backfire

Hey, Intel (NAS: INTC) ! Loose lips sink ships, you dig?

The chip giant is putting its back into marketing the new Ultrabook laptop format. Apple started that idea with its Macbook Air, but Intel hopes to refresh a flagging PC market by extending the thin and light concept to other system builders. Ultrabooks are already sitting on store shelves, but the real advertising offensive will start in April. Intel may spend more than $300 million on just the promotion campaign, according to Reuters.

Maybe that's not the best idea ever. Reports from the CES showroom floor say that Intel rival Advanced Micro Devices (NYS: AMD) will latch onto Intel's expensive marketing campaign ... and then undercut its system prices by several hundred dollars.

AMD's super-light notebooks should hit stores starting at $500 apiece, well below the $800 price point Intel caters to today or even the $700 goal Chipzilla set for the end of 2012.

It's not an automatic success story, of course. AMD still has to deliver competitive Trinity processors for its ultrathins, and its desktop brethren are not looking good so far. Selling inferior laptops purely on a pricing advantage would be a losing battle. After all, Apple's airy original sells for a serious premium to other notebooks -- or Ultrabooks.

Moreover, Intel adds some unique features to its Ultrabooks, such as voice and gesture control courtesy of a contract with Nuance Communications (NAS: NUAN) . Nuance and Intel call this a "partnership," though it's not clear whether the software is exclusive to Ultrabooks or also available for competitors like AMD. If it's exclusive, we're looking at a major selling point that needs to be properly marketed.

I'm hanging off the edge of my seat to see how Intel's marketing division will handle this delicate situation. The company must not only promote a new class of thinner and lighter machines, but also make it perfectly clear to the average consumer why Intel-powered ones are better than the competition. That's not as easy as it sounds, even if it happens to be true.

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At the time thisarticle was published Fool contributor Anders Bylund holds no position in any of the companies mentioned. The Motley Fool owns shares of Apple and Intel. Motley Fool newsletter services have recommended buying shares of Apple, Intel, and Nuance. We have also recommended creating bull call spread positions in Intel and Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinion, but we all believe that considering a diverse range of insights makes us better investors. Check out Anders' holdings and bio, or follow him on Twitter and Google+. We have a disclosure policy.

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