Thu, Jul 19, 2012 - Page 13 News List

Taiwan needs to be refocusing on software: experts

By George Liao  /  Staff reporter

Taiwan should incorporate its hardware technology strength with software innovations to create killer applications to break away from low-profit industrial patterns, Quanta Computer Inc (廣達) chairman Barry Lam (林百里) said yesterday.

Citing companies such as Google Inc, Amazon.com Inc and Facebook Inc as examples, Lam said these firms have created successful business models by changing people’s behavior, enabling them to search for information, buy digital content and conduct social networking online.

When trying to create a business model, firms should think about questions such as what the value is to users, who pays for the product and where the profit comes from, he said at a cloud-computing seminar in Taipei.

“Make something that is smart, has more value and is needed by more people through innovation instead of making cheap products,” Lam said. “Doing this will bring more profits for Taiwanese companies and the country will have a good chance to break away from the low-profit original equipment manufacturer [OEM] pattern.”

However, third-generation (3G) communication technology cannot cope with the development of cloud computing, Lam said as he urged the government to quickly establish a 4G infrastructure.

Google Taiwan general manager Chien Lee-feng (簡立峰) agreed with Lam, saying that Taiwan is faced with many challenges because it lacks services in the field of cloud computing and the local hardware industry does not have enough imagination.

Devices with no cloud computing service will have lower profit margins, which means cloud computing has given rise to opportunities as well as challenges, he said.

“Given the country’s hardware manufacturing basis, which is its strength, Taiwan should make a lot more than PCs,” he said.

“In the cloud-computing era, we will have many more devices linked to the cloud in the future. We might have a watch linked to the cloud to check our health and a device in our car linked to the cloud for safety,” Chien said.

Software plays a big role in the development of cloud computing, he said.

“Taiwan tends to overlook software and this needs to be changed,” Chien said.

Taiwan’s PC industry has long featured a horizontal division of labor, backed by standard software from Microsoft Corp, that enabled local hardware makers to focus on faster time to market or cost reduction.

However, in the era of cloud computing, Taiwanese original design manufacturers (ODMs) such as Quanta, Compal Electronics Inc (仁寶) and Wistron Corp (緯創) will need to make significant changes to increase profits, Intel Corp’s Taiwan country manager Jason Chen (陳立生) said at the seminar.

“ODMs need to become more vertically integrated and invest more in software to earn a place in a mobile platform ecosystem, such as Google’s Android system,” he said.

Acer Inc (宏碁) and Asustek Computer Inc (華碩) have been seen as efficient platform providers rather than good service providers, which may become the biggest challenge for the pair in developing their cloud business, he said.

Additional reporting by CNA

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