Mon, Mar 10, 2008 page12

• FEATURE: Asustek Eee PC shows less is more

  SMALL IS GOOD Nearly 400,000 of the US$200 Eee PCs have been sold since its launch three months ago. New versions will be powered by Microsoft Corp software

  • By Lisa Wang / STAFF REPORTER
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  In mid-October, local PC maker Asustek Computer Inc (華碩電腦) chairman Jonney Shih (施崇棠) told reporters two hours before the launch of the company's first low-cost computer that it was not a toy, as some people might have thought.

  Instead, "The Eee PC series is a milestone for Asustek's long-term efforts in facilitating a digital home and digital life," Shih said.

  "At its price point, we believe Eee PC's got great potential, especially in emerging markets like China and India," Shih said.

  He said the product targets people with less PC experience such as children and elderly people.

  The US$200 Eee PC model, running on an open platform Linux system and outfitted with a 7-inch liquid-crystal-display screen, is priced at a mere quarter of the US$1,000 entry-level price for a regular laptop and 37 percent lower than the US$399 iPhone handset from Apple Inc.

  The sales figures have proven Asustek's success in creating a new laptop segment in a market where major players are striving harder to sell computers with ever stronger performance and more functions in efforts to boost profits.

  Within three months of the launch, Asustek had sold 400,000 units of its "Eee PC" series. People are still lining up for it in Europe, the firm said.

  On top of that, Asustek said its new version of the Eee PC series is set to hit the global market next quarter.

  The new model will have a bigger 9.8-inch screen and be powered by Microsoft Corp's system, increasing the likelihood that the company can meet its goal of selling another 3.8 million to 5 million Eee PCs this year.

  In fact, six months ago, major PC makers took a wait-and-see attitude and doubted that notebooks with a screen as small as 7 inches and simple computing functions like the Eee PC could create profits as low-priced handsets have in emerging markets.

  "It will take at least three months to see whether the product will survive," Wang Jeng-tang (王振堂), chairman of the world's No. 3 PC maker Acer Inc, said at the time.

  Wang had also said that Acer would not sell such laptops, unless one day they became a mainstream product.

  Following suit, Acer and the world's top PC maker Hewlett Packard Co have said they planned to sell laptops with screen sizes smaller than 9 inches and more simple functions in the second quarter to complete their production lineup in terms of price. Acer said US$500 per unit might be a reference price.

  "Low-cost PCs are likely to become the product most PC vendors have to sell this year," said Jane Tseng (曾筱軫), a PC industry analyst with Taipei-based market researcher Topology Research Institute (拓墣產業研究所).

  Shipments of low-cost laptops including the One Laptop Per Child project are expected to reach 15 million units this year, making up approximately 13 percent of total laptop shipments, Tseng said.

  The Eee PC product line has a lower performance than regular laptops, but are just as well designed aesthetically and functionally and could attract fans of new technology products, consumers with limited budgets and users who only require the most basic computing and Internet functions, said Helen Chiang (江芳韻), a Taipei-based PC analyst with International Data Corp (IDC).

  Ray Chen (陳瑞聰), president of Compal Electronics Inc (仁寶), said the world's second-largest laptop computer maker by contract aimed to ship 32 million notebooks this year and 5 percent to 10 percent of the amount would be low-cost PCs. Compal planned to ship low-cost PCs to customers in June or July.

  As notebook computer makers were developing notebooks with lower prices than regular models and a bigger screen than 9 inches or 10 inches, low-cost PCs will inevitably take away some share from regular notebooks in the future, Chen said.

  More notebook makers are joining the trend of selling low-cost models later this year, said Vincent Chen (陳豊丰), an analyst with CLSA Ltd (里昂證券).

  "We are not really that concerned about fresh competition," he said.

  Asustek's global market share has expanded to 4.7 percent from 3.3 percent over the past year, catching Sony Corp as the world's No.6 notebook computer maker in the final quarter of last year, IDC said.

  From the first edition of 4GB solid-state drive Flash memory models to the latest 8GB models, Chen said the product has served its purpose well.

  Chen reiterated its "buy" rating on Asustek in expectation of a 40 percent annual growth in its branded business this year, thanks to strong product design, share gains from Japanese names and Eee PC's promotion of its brand name in the US market.
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