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Sun, Oct 19, 2008 - Page 12 News List

Asus sets sights on the ‘gorgeous’ computer market

By Jack Schofield  /  THE GUARDIAN , TAIPEI

Industry giants such as Apple, Dell and HP can turn a notebook launch into a global event, but that’s not the sort of thing a Taiwanese company would normally attempt. Taiwan does cheap, not chic. But having what looked like a hot product in the S101 netbook, Asus decided to have a go, and paid to bring the world’s tech press to a fashion show in Taipei.

The event was somewhat short of chic. And as you’d expect from a first attempt, Asus had a lot to learn about herding recalcitrant journalists.

The potential benefits to Asus of pulling off this kind of event are enormous. It is turning itself from a motherboard supplier and contract manufacturer-making portable PCs for other companies — into a tier-one supplier with a global brand name. If it can do that, customers will pay more for its products.

The S101 is a case in point. Asus is becoming known to European consumers following the success of its netbooks, starting with the little Eee PC700 — but what caught the eye was its price, £200 in the UK and around US$320 in the US. With the Eee S101 — £449 (US$777) in the UK — what catches the eye is that it’s really thin and, as another journalist said, “gorgeous.” It could have been made by, or for, Apple or Sony. It didn’t look out of place in a fashion show. Functionally, the S101 is just an Eee PC 1000 at a higher price. But you might be willing pay extra for something you’d be proud to carry.

That message was spelled out by Stan Shih (施振榮), the founder of Acer and father of the Taiwanese computer industry. At a business seminar in Taipei, reported by Elizabeth Tchii in the Taipei Times, he said the future was in branding, no matter how difficult it was to achieve.

“The days of doing OEM and ODM [making boxes and designs for others to put their own brand name on] are numbered,” he said. “In order to elevate Taiwan to the global business scene with added value, we have to invest in branding right now. This is our social responsibility.”

It’s a path Acer has taken, under the Italian management of Gianfranco Lanci, partly by buying known US brands such as Gateway and Packard Bell. It’s a path China’s Legend, now called Lenovo, has taken by buying IBM’s PC division. But Asus is trying to do it by transforming the company.

‘SMALL BUT BEAUTIFUL’

Jonney Shih (施崇棠), who started Asus in 1989 after a dozen years at Acer, says Asus was intended to be “a small but beautiful company” based on its engineering prowess. It became known for technical innovation in motherboards, but he says the company also tried to make them look beautiful. In 1997, the company went from motherboards into notebooks as an OEM and ODM supplier, then launched products under its own brand name.

Jonney Shih said the company was named Asus after an engineer suggested Pegasus. He truncated it because he wanted a name that started with an A. They’ve now spun off the OEM and ODM businesses into a separate company called Pegatron, thus using the spare half of the flying horse’s name. Pegatron’s offices are visible from Asus’ doorstep, but the split means Asus isn’t competing directly against its own customers.

Again, Asus is following Acer, which split off its OEM business into Wistron on the way to becoming a global brand name. By contrast, the two giants of Taiwan’s OEM business, Quanta and Compal, who manufacture notebooks for Apple, Dell, HP and Lenovo, remain almost unknown. But the fear is that OEM contracts could be moved to companies in China, Vietnam and emerging countries which, HTC’s founder Peter Chou (周永明) says, are catching up fast.

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