Tue, Apr 17, 2007 - Page 12 News List

Asustek venturing into budget laptops

INTEL CONNECTION Plans to launch five new low-priced notebook PC models this year would help Asustek move into a new segment and expand its economies of scale

By Jason Tan  /  STAFF REPORTER

Asustek Computer Inc (華碩電腦), the world's largest motherboard maker, is tapping into the market for budget notebook PCs with a slew of products scheduled for launch in the second half of the year.

"Tech giants such as Intel Corp don't want to miss out on the potential of the budget PC segment, and we are working with [Intel] to tap into the market," confirmed an Asustek official, who requested anonymity, in a telephone interview yesterday.

He was responding to a report that came out yesterday in the Chinese-language Commercial Times, which said Asustek would introduce a series of low-priced PCs based on Intel's Classmate PC platform in the second half of the year.

Joining hands with Intel offers Asustek the chance to move into a new segment, while beefing up its economies of scale in computer production, the official said.

Details of these budget laptops, including channels and distribution, still need to be ironed out, but they would not be Asustek's main product line, he added.

According to the Commercial Times report, the five budget laptop models would be priced from US$199 to US$549.

They will employ Intel's Solid State Disk with flash memory from 1 gigabyte to 40 gigabytes, instead of the standard mechanical hard drive, the report said.

The 7-inch panels for the notebook computers will be sourced from AU Optronics Corp (友達光電), it added.

"Although profit margins for these low-end PCs will not be as good as its other notebook computer series, Asustek will immediately benefit from the scale," Daniel Chang (張博淇), an analyst with Macquarie Research Equities, said in a research note yesterday.

Asustek's component costs could also drop as its sourcing expands with the additional volume from these budget laptops, he said.

"Asustek's technology strength will help it penetrate various PC segments ... Its global notebook market share will continue to rise at a fast rate," Chang said.

Asustek will be competing against Quanta Computer Inc (廣達電腦), the world's biggest notebook computer contract maker, in the budget PC arena.

Quanta is the sole manufacturer of the One Laptop per Child (OLPC), a project initiated by the Massachusetts Institute of Technology to distribute computers to children in developing countries.

Using the Linux operating system and low-cost materials, these notebook computers, priced at US$150 a unit, will come onstream later this year.

Quanta has said it aims to deliver more than 10 million OLPCs within the first 12 months.

However, Merrill Lynch cautioned last month that while the OLPC business model might be viable in its initial stage, users would face problems when they need maintenance help, software debugging, updates or help in handling viruses.

Shares of Asustek edged up 1.5 percent to NT$79.8 (US$2.41) on the Taiwan Stock Exchange yesterday, while shares of Quanta dropped 0.6 percent to NT$50.7.

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