Asustek seeks to secure netbook position

Jason Tan In Taipei
27 October 2008
Business Times Singapore

The Eee PCs' success has attracted a horde of rivals including Acer, Dell

IN April, barely six months into the launch of its first Eee PC netbooks, Taiwan's Asustek Computer chief executive Jerry Shen started thinking about how to churn out another new model that might set the company's offerings apart from competitors.

When it officially unveiled its third-generation Eee PC, the S101, in Taipei this month, the mini notebook only took Asustek six months from conceptualisation, design, manufacturing to hitting the stores.

This is an improvement from the 10 months it took to produce the first-generation Eee PCs.

'Innovation speed is the key,' Mr Shen said on how Asustek intended to distance itself from rivals.

Indeed, when Asustek took the throne by introducing the world's first netbooks in October last year, it did not expect these small laptops - coming with screens no larger than 10 inches and offering basic computer features - would have taken the market by storm.

The first-generation Eee PC was equipped with a seven-inch screen, simple user navigation and most importantly - an attractive price tag of below US$300, a steep decline from a mainstream laptop selling at above US$1,000.

Four million Eee PCs have since been sold during the first year and Asustek has made available over 10 models to date.

Asustek , which also makes motherboards, aims to ship over 20 million notebooks - both mainstream notebooks and netbooks - next year, up from this year's total of 11.3 million, chairman Jonney Shih told reporters after making an appearance at the Intel Developer Forum here last week to show support for Intel's Atom processors, which are used in netbooks.

The success of Eee PCs has attracted a horde of rivals including Hewlett-Packard, Lenovo, Dell and Acer, into the fast-expanding market.

Another new player is Taiwan's BenQ, which is hoping to gain share in the market by debuting a 10-inch model in November, starting first in the Greater China region.

'The market is promising. While growth of desktops and notebooks is steady, netbook expansion could be exponential,' said Richard Hsu, BenQ associate vice-president of computing product management centre.

BenQ, whose losses forced it into bankruptcy after its takeover of Siemens' mobile phone unit failed, is pinning its hopes on a comeback with new launches of mobile devices, including these smaller PCs.

However, while the netbook outlook is promising, concerns are rising that they could eat into the share of high-end smartphones and impact makers' profitability, said Ellen Tseng, an analyst with Nomura Taiwan, in a report on Oct 3.

Another challenge for Asustek is that local rival Acer is fast catching up.

Following the launch of its first netbook 'Aspire One' in July, Acer, the world's third-largest PC maker, is set to ship five million units by December.

Sales of Aspire One notebooks were bullish despite the current credit crunch, with one million units sold in September alone, according to Scott Lin, a vice-president at Acer.

'Acer's Aspire One is gaining momentum faster than Asustek's Eee PCs owing to Acer's better user interface,' Nomura's Ms Tseng noted.

Asustek is not letting its guard down.

'The barrier was high when we first initiated the first Eee PC, but now everyone is coming into the scene, the battlefield is getting tougher,' Mr Shen said.

With the launch of the S101 at a price tag of US$699, it is shattering the impression that netbooks should be cheap and overlook the elements of design and functionality.

The model is said to 'meld fashion, aesthetics and technology', and is being compared by some to Apple's MacBook Air with its light weight of 1kg, thickness of 1.8cm and 10.2- inch screen.

It comes complete with Windows XP Home, 1GB RAM, 16GB of solid-state- drive storage, three USB ports, Wi-Fi, Bluetooth and a replaceable lithium-polymer battery that runs around five hours.

Future Eee PCs will no longer be only 'cheap' and 'simple functioning', Mr Shen said, as they could be priced anywhere from US$200 to over US$1,000 depending on functionality, and more models catering to a range of low to high- end needs will be in the pipeline next year.