Taiwan’s top computer vendors are transitioning

By Paolo Del Nibletto

I’ve just learned that Acer’s Chairman C.T. Wang cancelled his interview for Friday on this tour of Taiwan. It’s really disappointing but Jonney Shih, chairman and CEO of Asus, was still on the docket.

During my time with him I learned that Taiwan’s top computing vendors are transitioning from being manufacturers for top North American brands such as Apple to building up its own brands. This small country of just 23 million people has always been known for making other vendors’ products. Foxcom, for instance, produces the iPhone for Apple.

I also learned there is a secret boat, that isn’t so secret anymore, that has left Taipei harbour carrying boxes stamped with the Apple logo. What’s in the boxes? Well, I thought at first it was iPhones for Canada. But I later found out the boat is heading for somewhere on the West coast of the U.S. So, your guess is as good as mine.

It not that Taiwan’s IT industry is abandoning original design manufacturing (ODM); it just is no longer going to be its core business.

Asustek, for example, is shifting its ODM to a separate independent business unit called Pegatron. Going forward, Asus will be on its own. The manufacturing of computing products has already shifted for the most part to China because of the high labour costs in Taiwan. In the past, manufacturing was a key strength, but over the years their margins have gotten slimmer, and slimmer and slimmer.

Taiwanese products were regarded as cheaply priced goods, said Michael Kuo CEO of Avermedia, who I met later on in the afternoon here. Kuo said that today’s Taiwanese manufacturers such as his company would rather be affordable and not just cheap.

Kuo added that Taiwan wants to educate its people. The company is providing something called a document camera as a better visual teaching aid as part of its product set. They have also adopted six sigma strategies similar to Asus.

Acer, D-Link and Asus are focusing on themselves and specifically on brand, while leaving the manufacturing to the Chinese and Vietnamese. Besides focusing on their own brands, these companies are also keeping important departments such as R&D, engineering and design in Taiwan.

According to Kuo, Taiwan will keep its knowledge to continue creating many more high quality products. This is a fundamental difference between China and Taiwan.

This change in philosophy hit a high note last year with the introduction of the EEE PC notebook by Asustek. This little machine is a major seller at Best Buy in the U.S. It also created quite a stir in Europe and other nations in the Pacific Rim. Before this device, the Taiwanese computing vendor’s strategy was just that – a strategy. It had not yet produced any real results.

This small device has put a spotlight on Taiwanese vendors again. It showed that these companies can be innovative and provide real value. The channel has taken notice with Acer, but look for more resellers to partner with Asustek because of the low-cost EEE PC.

Asus chairman Jonney Shih said there will be many models of the EEE PC so that it can be more than just a consumer notebook. There will be more robust EEE PCs for business and the enterprise and the company is building on its EEE brand with EEE box gaming console, EEE stick video game remote, EEE TVs, and maybe even the EEE toaster that plays music.

One quick hit before I go. Vancouver-based Epic Data International Inc. has appointed Robert Nygren as president and CEO. The former president and CEO of financial software developer Fincentric Corp., Nygren replaces interim CEO James Dodds, who was appointed in October 2006.

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