PC Demand is Climbing

Reuters reports that demand for PCs is starting to increase again but argues that the PC manufacturers have defended their market share (and tried to seize market share) with aggressive pricing strategies. According to Reuters:

A gradual bounce back in consumer demand is helping keep the struggling personal computer market afloat, but plunging prices and a shift toward cheaper machines will keep up the pressure on profits.

Globally, consumers are coming back to PCs, but they are doing so at prices as much as one-fifth lower than even a year ago, analysts say.

Hewlett-Packard Co, Dell Inc and rivals Acer and Lenovo have slugged it out to keep sales up and safeguard or take market share: a battle that of late has been waged by aggressive pricing, analysts say.

Pacific Crest Securities analyst Brent Bracelin noted PC prices have fallen for years, but the decline accelerated with the introduction of no-frills netbooks. He said PC makers have plenty of experience managing costs to maintain margins.

"There's always going to be pressure," he said. "The question is how well do you manage the supply chain and try to reduce costs at the same pace as the price decline or faster."

The global PC market is still limping along, with second-quarter shipments falling 5 percent from a year ago, according to Gartner. But that result was better than expected, and Gartner said the continued growth of low-cost laptops was a driving factor.

A bounce back in the PC sector is good for Taiwan. The bounce back, if real, will certainly seep through the supply chain and increase demand from PC component suppliers. This in the long run will have a positive impact on the Taiwanese economy and hopefully ensure people here will be able to find more jobs and opportunities. The other interesting side of this would be to understand who has lost and gained. There was speculation earlier in the year that ACER would climb above Dell to no. 2. Time will tell I suppose but my guess would be that in these times that demand frugality and attention to cost, the Asian suppliers might be better off.

Consumer PC demand is back, but at what price?

News from the Notebook Market

Acer is targeting 50% revenue growth in India through the sale of notebooks. The Business Standard writes:

PC vendor Acer expects a 50 per cent growth in its revenue from the Indian market in the current fiscal, a top company official said.

"Our revenue in the last fiscal stood at Rs 1,200-crore. This year, we expect it to grow by 50 per cent to Rs 1,800-crore,' Acer India's Managing Director W S Mukund, said on the sidelines of the launch of Aspire One notebook, the company's first Internet device in the Indian market.

The company was pinning its hope on the newly-launched product, Mukund said, adding that, "Acer is aiming to sell 75,000 units of these notebooks over the next 12-months." In the first month of the launch itself, the company is targeting a sale of 5,000 units, he said.

Compal and other downstream notebook component suppliers are expected to benefit from a new notebook model launched by Dell. The new model will be produced by Compal. China Economic News writes:

Despite a rather conservative outlook for the notebook PC market in the second half this year, Compal Electronics and a number of Taiwanese makers of notebook-PC parts and components are expected to benefit from the rollout of a brand new series of business-use NB PC by Dell Computer, the world`s second largest NB PC vendor.

Michael Dell, chief executive officer of Dell, is scheduled to unveil the new model tomorrow (Aug. 13) in New Delhi, featuring light weight and colorful design, in stark difference from conventional business-use NB PCs, which emphasize function and stability, without much variety in design.

The new model will be contract-produced by Compal Electronics and its magnesium-aluminum alloy case is likely to be supplied by Catcher Technology. Other Taiwanese components and parts suppliers for the model include Shin Zu Shing, Simplo Technology, and Dynapack Battery Pack.

Finally, Trading Markets says notebook sales have surged in China. Trading Markets writes:

China's laptop sales surged 47.5% from a year earlier to 1.897 million units in the second quarters of 2008, showed the data of CCID Consulting, a leading IT market research and consulting company.

The top five computer makers led by Lenovo Group Limited (SEHK: 0992) took 71.4% of the Chinese market.

Dual core processors have become the mainstream configuration for laptops. The hardware tended to have big screens, large capacity, and high definition. VISTA was still unable to beat Windows XP in the operating system market.

Laptops are likely to take the place of desktops in the mounting home computer market, where Dell Inc. (Nasdaq: Dell) was enlarging its share after broadening retail channels, and Samsung was consolidating its foothold after product and price adjustment.

The surge in China will definitely benefit Taiwanese manufacturers. It seems the notebook market has a reasonable future ahead.

The Business Standard: Acer targets 50% revenue growth to 1,200 cr in FY 09
China Economic News: Dell`s New NB PC Will Benefit Compal and Other Taiwanese Makers
Trading Markets: China Laptop Sales Surged 47.5% in Q2

First China Invested Company to List in Taiwan

Forbes reports Rock Mobile may be the first China Invested company to list on the Taiwan Stock Exchange. Forbes writes:

Rock Mobile Corp is likely to become the first China-invested company to list in Taiwan, probably as early as the end of the year, the Economic Daily News reported.

Rock Mobile, which has Lenovo Group Ltd, Siemens AG and Taiwan's Acer group as its shareholders, will apply for emerging-stock status before seeking a listing on the Taiwan Stock Exchange or GreTai Securities Market, the newspaper said, citing sources with Taiwan's Fubon Securities Co Ltd, which has won an underwriting mandate.

Fubon Securities, a wholly owned unit of Fubon Financial Holding Co Ltd (2881.TW), is also offering guidance to several other Taiwan-invested companies on the mainland planning to pursue domestic listings, it added.

Interesting article indeed. The relaxation of regulations between Taiwan and Chinamay result in more companies coming from overseas (China) and listing in Taiwan. This would actually make a lot of sense. Most people I speak to who know the game say the Chinese stock markets are pressure cookers driven by a lot of speculation (well now they are in decline). The benefit of listing in Taiwan I suppose is a more established investing environment with less speculation (although it does happen) and greater stability. I suppose this will make the Taiwan bourse more competitive.

Also since they are listing in Taiwan they may have to have their headquarters in Taiwan and not China (not sure what the regulations on that are though). If this is true then the corporate HQ will offer more employment opportunities to local people as well as increase the tax base for the Taiwanese gvt. and provide the Taiwan gvt. with another taxable revenue stream.

Forbes: Rock Mobile may be 1st China-invested company to list in Taiwan - report