Asusutek expands consumer-goods to stay competitive

Asustek Computer Inc (華碩電腦), a leading motherboard and laptop computer maker, is quickening its pace to vie for a greater presence in the digital consumer-electronics sector, a company executive said yesterday.

To sustain profitability amid falling profit margins in making personal computers, Asustek plans to roll out its second cellphone model. The new model is a "smart phone" which combines the functions of a handset with those of a personal digital assistant, Asustek chairman Johnny Shih (施崇棠) said, without giving a timetable for the new product lineup.

"We believe this area [consumer electronics] is very important in the future as it's a trend which is already happening to live a digital life," Shih told the Taipei Times on the sideline of an industry forum arranged by Monte Jade Science & Technology Association (玉山科技協會) yesterday in Taipei.

"Our new products will surprise local consumers. They are fancy in style. Female consumers will like them," he said.

Asustek's moves to gain a bigger role in the global consumer-electronics market is turning aggressive this year after rolling out the company's first brand-name clamshell handset and a "barebones" desktop PC system, which can be used to get on the Internet and other entertainment functions, during Computex Taipei last month.

In addition to producing handsets and PDAs, Asustek also assembles game consoles for Microsoft Corp.

Sharing a similar strategy with its local competitors, such as laptop giant Compal Electronics Inc (仁寶電子), Asustek is gradually shifting its strength to digital consumer gadgets and mobile phones due to continuously falling profit margins in laptop-making for international brand-name companies.

"It's an choice Asustek has to make to sustain profitability, as the PC sector has become a mature industry with scant room for future growth," said Leon Chen (陳正宭), an industry researcher at Hua Nan Securities Investment Management Co (華南永昌證券).

Asustek is a late entrant in the consumer electronics business, but "it is on the right track," Chen said. "How consumers react to its new products will be a deciding factor for its long-term development."

Asustek generates most of its revenue from motherboards and notebook computer businesses, which account for about 40 percent and 34 percent of its total revenue, respectively.

"[The anticipated boom in] consumer electronics, or digital home appliances, gives IT hardware providers at home and abroad a good opportunity to regain growth-strength," said Grace Chen (陳星嘉), a personal computer analyst with Insight Pacific Investment Research (月涵投顧) in Taipei.

After US computer giant Dell Inc and Hewlett-Packard Co announced they would tap into the digital consumer-electronics sector to produce flat-screen televisions, digital cameras and MP3 players, Taiwanese IT companies also followed suit, with Asustek being the latest example, Chen added.

Quanta Computer Inc (廣達電腦) and Compal, Taiwan's two largest laptop makers, said recently that they planned to produce liquid-crystal display televisions for their international vendors such as Japan's Matsushita Electric Industrial Co -- maker of the Panasonic brand.

Chen believes the introduction of Asustek-brand handsets to the local market is just a way to demonstrate the company's manufacturing capability to global handset vendors.