Mon, Aug 16, 2010 - Page 12 News List

Asustek figuring next step

PLAYING CATCH-UPThe netbook PC pioneer is losing out to Apple in the chase of the fast-growing tablet PC market and its reliance on netbooks makes it vulnerable

By Jason Tan  /  STAFF REPORTER

The iPad craze has prompted netbook pioneer Asustek Computer Inc (華碩電腦) to carefully gauge its next step in competing with Apple Inc in the tablet PC market.

“The iPad has set the bar high,” Asustek CEO Jerry Shen (沈振來) said at an investors’ conference at the company’s Beitou (北投) headquarters on Friday.

“We have to create a model that differs from the iPad in terms of features ... We can’t just compete solely on pricing strategy,” he said.

The company is in full alert as analysts have said the iPad has successfully revived tablet PCs — which were introduced years ago but failed to generate mass enthusiasm — and this has even eaten into the share of netbooks — a niche market that Asustek created in 2007.

A high portion of Asustek’s 800 research and development staff that are currently working on Google Inc’s Android platform would be allocated to the development of the Eee Pad — Asustek’s answer to the iPad, Shen said.

He added the company’s know-how in PC development and rapport with Microsoft Corp, Intel Corp and Google would give it an edge in seizing a sizeable tablet PC share.

Shen refused to say more to reporters the same day, but said the first Eee Pad would hit store shelves in December or in January next year.

The 12-inch model is Wintel (Windows and Intel)-based and will carry a price tag of more than US$1,000, about double that of the iPad’s entry-level model.

Another model from Asustek, due to launch next March, will run on Android and sell below US$399.

Shen said the iPad would seize as much as 60 percent share in the total tablet market next year, with the remainder to be split among rivals.

“We hope to get a leading share of the remaining pie,” he said.

Raymond Sung (宋福祥), chairman and chief executive officer of Simplo Technology Inc (新普科技), the world’s largest notebook battery pack maker, predicted on Thursday that the tablet PC market would stand at 40 million units next year.

Sung said a number of its clients had plans to launch iPad-like tablets in the second half, by already placing battery pack orders with Simplo.

“I initially thought I would never get used to high-tech gadgets like the iPhone, but it is so user friendly and marvelous,” said the 61-year-old Sung, who flaunted his iPhone at Simplo’s investors’ conference. “By the way, I am not promoting the iPhone here ... Simplo doesn’t supply battery packs to iPhone.”

He agreed with market sentiment that has said the netbook market would slow this year as a result of the tablet invasion and added the netbook was a “transitional ­product” while tablets are here to stay “for at least five more years.”

“How successful the product will be depends on how capable the pioneer of the product is,” Sung said.

According to Goldman Sachs analyst Henry King (金文衡), with a slew of smartphone makers already announcing respective plans for their tablet devices, there could be intense pricing competition which may spell margin erosion for the players.

These smartphone markers enjoy a lead with their Android platform, something Asustek is not well versed in, King added.

LG Electronics, Samsung Electronics and Research In Motion are set to roll out tablets, while HTC Corp (宏達電) is reportedly planning a foray into the segment, too.

“Looking into next year, we believe Asustek may be more vulnerable to the iPad than most PC players, given its relatively higher sales exposure to netbooks,” Citigroup analyst Kevin Chang (張凱偉) said in a report released on Friday.

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