Undoubtedly, the biggest bombshell in the business world last week was the announcement by the world’s No. 1 PC maker, Hewlett-Packard Co (HP) that it intended to spin off its PC unit into a separate entity, while unveiling a plan to buy UK software company Autonomy Corp for US$11.7 billion.
HP’s move to exit from the struggling PC sector is the clearest indication yet that the post-PC era has arrived. Indeed, computers are now just one device among many used to surf the Internet.
This should serve as a wake-up call for Taiwanese PC companies, which make 80 percent of the world’s laptop computers. This year, PC sales will grow by an anemic 9.3 percent to 385 million units, market research firm Gartner forecast.
Reinforcing the death of the decade-long PC--centric era, the latest statistics from research firm DisplaySearch indicated that Apple Inc overtook HP as the world’s No. 1 mobile PC maker by shipping 13.5 million mobile PCs, mostly iPad tablet devices, last quarter, versus HP’s 9.7 million units.
The implication of this shift is that Taiwanese firms — PC brands like Acer and Asustek Computer, in particular — need to scrutinize their business strategies and take drastic action to secure profit growth in the low gross-margin PC industry when growth is coming from content and services, not hardware.
For Acer and Asutsek, tablet devices seem to be the answer as their efforts in the smartphone market have descended into farce.
“We flunked the smartphone business, where there are barriers we cannot overcome,” Acer chairman J. T. Wang (王振堂) said last month. “Tablets will be our priority.”
Asustek won an initial victory with its popular Transformer tablet, first launched last month. It recently raised its forecast by 30 percent for shipments of its first tablet product to 400,000 units for the current quarter.
Acer’s first tablet, Iconia Tab A100, hit US and European markets this month, two months after it was showcased at this year’s Computex.
The pressure on local PC makers to transform their business models continues to increase. In addition to developing new ultrabook laptop computers, they also need to shift their focus to software and services, areas in which they remain weak.
Acer has been slow at identifying and responding to industry trends, particularly the increasing importance of new mobile devices. The firm used to believe that large-scale production would ensure success — as was the case with netbooks and tablets — but such confidence has since disappeared. In a rush move, Acer last month signed an expensive deal to acquire US cloud-computing company iGware for US$320 million in cash and share swaps, taking on Apple’s newly launched iCloud service. The company now plans to offer cloud computing services to its PC users next year at the earliest, but no details have yet been disclosed.
Even local contract notebook computer makers, such as Quanta Computer Inc and Wistron Corp, are placing their bets on cloud computing and the electronic products that can deliver its services.
Last week, Wistron’s board approved construction of a US$3.5 million cloud computing center in China, while Quanta is providing servers to telecoms carriers, such as the nation’s top telecoms company, Chunghwa Telecom Co, to build cloud computing data centers.
Local PC companies are moving in the right direction, but the deciding factor is how fast they can catch up to competitors — not HP or Dell, but Google and Amazon — in providing customers with integrated digital services. What they are doing now is just one tiny piece in the global value chain for mobile computing devices.