Wed, Nov 19, 2003 - Page 10 News List

Wal-Mart's plan for branded laptops won't work in Taiwan: analysts


Wal-Mart Stores' plan to sell laptop computers under its own brand name might not guarantee the same level of success for Tai-wanese companies that are planning to develop a similar business model here, industry leaders and analysts said yesterday.

The US retail giant announced in August that it would begin offering tailor-made computers -- under the Avail brand name -- through its Wal-Mart Online Internet site.

"Wal-Mart is one of few [that could be successful in this area]. It'll be very difficult for Taiwanese retailers to sell their brand-name products," said Stan Shih (施振榮), Acer Group chairman and CEO.

According to Shih, Synnex Technology International (聯強國際) could stand a chance of success with this new business model. "Synnex, Taiwan's No.1 electronics retailer, really has the opportunity [of successfully expanding to the laptop market]. But I doubt whether this would create additional value for the corporation."

Synnex started to provide a service similar to Wal-Mart's in August by launching its first laptop computer under the Lemel brand name. The move followed the local electronics retail chain's success in grabbing about a quarter of the local desktop consumer market.

"Our brand-name laptop sales are not as good as that of the big-name notebook computer vendors," said a company official sur-named Wang.

Synnex's laptops are priced at NT$40,000 to NT$50,000, which is much lower than the NT$60,000 price tag of international brands such as Dell or HP. Wang declined to reveal how many Lemel laptops have been sold over the past months.

Analysts said Wal-Mart and its local counterparts will find it difficult to score big success by tapping into the brand-name laptop market due to consumers' purchasing habits and the high cost of maintenance.

"Wal-Mart's move only serves as a test of the consumer's palate. Costly maintenance outlays will be a big problem for Wal-Mart because of limited unit sales," said Chou Chi-shian (周奇賢), an analyst with SinoPac Securities Corp (建華證券).

There are big hurdles for companies that try to sell different types of products under the same brand name, Chou said.

Wang also blamed stubborn buying habits for its slow laptop sales, but said Synnex provides tailored services for consumers, unlike Wal-Mart's policy of only selling the branded laptops.

A Chinese-language newspaper reported yesterday that the Arkansas-based Wal-Mart has been involved in talks with some Taiwanese companies, including Arima Computer Corp (華宇), to manufacture laptop computers.

Arima, which currently supplies notebook computers to Sony Ericsson Mobile Communications on a contract basis, did not return a call to confirm the report.

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