ASUSTek Changes the Game

From a 5 June article on Business Week:

While computer makers have pushed to build faster, more powerful laptops in recent years, the executives at Taiwan's Asustek Computer decided to try something different. They thought some people wanted a simpler computer. And they were right. Since its introduction last October, Asustek's Eee PC—a mini-laptop that retails for as little as $300—has become a huge hit around the world. The company expects to sell 5 million units this year. "We changed the concept," says Chief Executive Officer Jerry Shen.

Yes, AUSTek have changed the perception of what a computer can and should be. Low cost PCs are useful devices to those of us who do not require the full power of a PC. Gamers and other high-end consumers need powerful processors and huge storage capacity to play games and store videos and photos. But what about those of us who don't care about games? Why pay for processing power and capacity we will never use?

I guess ASUSTek wisely realized many people only want to be able to type docs, access the net and answer emails. Not all computer users are tech-junkies with a desperate need to over-clock.

Business Week does highlight that ASUSTek is not an international brand like HP, Dell or Lenovo but they do acknowledge the Eee PC has helped to establish their brand. The article also focuses on some of the things ASUSTek has done to become more profitable and competitive including focusing on design and spinning off their manufacturing plants.

Of course standard economics dictates when a product is as successful as the Eee PC, other players will also jump into the market and, according to Business Week,

Asustek still faces some big challenges before it can join the tech industry's elite. Some caution that the mini-laptop's success could erode profitability at Asustek, which made $910 million last year on sales of $24.9billion. Daiwa Institute of Research analyst Calvin Huang estimates the Eee PC's margins are 10% to 15%, compared with gross margins of 21.5% for the whole company. With Hewlett-Packard, Acer, and Dell gearing up to start selling similar machines, margin pressure is likely to grow. "The Eee PC is a significant innovation in the PC industry," Huang wrote in a report last month, but "its success is unlikely to be sustained."

ASUSTek is used to operating in a competitive environment. They may lose some market share in the low cost PC sector but they should be able to hold their own. I think they are doing a great job and should be complemented on their innovation and foresight.

Article: The Mini-Laptop Changing the Game