Taiwan Tech Firms Strive to Be Global

For more than a decade, Western technology companies and Taiwanese manufacturers had a simple, mutually beneficial arrangement.
##CONTINUE##
The Taiwanese companies built music players, laptops and cellphones to precise specifications dictated by customers like Apple, Hewlett-Packard and Motorola. The Western companies then slapped their familiar labels on the devices, marked up the prices and bombarded consumers with advertisements celebrating their innovative wares.

But in the last couple of years, that tight relationship has begun to fray. No longer content to lurk in the background, some of the Taiwanese companies have sought a more direct route to consumers — and the higher profits that come with owning a global brand.

A few of the Taiwanese companies have even developed reputations as technology leaders. With its Eee PC, Asustek practically invented the most popular category of personal computers today: the ultralight Web-oriented laptops known as netbooks.

Acer, poised to overtake Dell as the world’s second-largest PC maker after Hewlett-Packard, has used its manufacturing might to produce powerful PCs that it can sell more cheaply than its competitors. And HTC developed the first smartphones to use Google’s Android operating system, becoming a showcase for the potential of the new software.

“There is a strong desire in the Taiwanese industry to try and break through,” said Mark Lee, a Taiwan native who runs a software start-up in Silicon Valley called DeviceVM. “I think the industry is going through that big transformation right now.”

Nowhere is the transformation more clear than in the market for netbooks. Acer and Asustek claim about two-thirds of the nascent category, whose sales have soared despite an overall plunge in PC sales.

In addition, Asustek ended last year as the fastest-growing PC company in Europe. Acer, which sells computers under its own name as well as through acquired brands Gateway, eMachines and Packard Bell, is the fastest-growing PC maker over all, according to the research company Gartner.

Despite their sales gains, the Taiwanese companies still have a long way to go to match the marketing flair of an Apple or H.P. Their brands, while strong in Asia, remain largely unknown to consumers in the United States. They do little direct selling to individual or corporate technology buyers, preferring to work through retailers and other intermediaries. And a tradition of secrecy has led to an awkward relationship with the news media.

“They have to adapt and sort that stuff out,” said Mark Hamblin, who helped develop the touch-screen technology for the Apple iPhone and now runs Touch Revolution in San Francisco. “But if someone with that Taiwan base really figures that side out, they will be very, very successful.”

The changing role of the Taiwanese manufacturers is apparent this week at the annual Computex technology trade show in Taipei.

Traditionally, the event has focused on manufacturers’ showing off their latest wares to current and potential partners. Thousands of people come to see components such as power supplies and the fans used to cool computers. Signs herald “overclocking memory with the latest heat spreader,” language that, while foreign to most people, makes hardware enthusiasts drool.

Recently, though, exhibitors at Computex have started to promote much more than their latest circuit boards. Local and foreign companies now use the show to introduce products that they hope will shake up the computing market.

Noury Al-Khaledy, the general manager for mobile products at Intel, says out that Computex has risen in importance as Asian countries, especially China, have turned into the largest potential growth markets.

Two years ago, Asustek introduced the Eee PC at Computex. The small, cheap laptop ignited a wave of enthusiasm in the PC industry. Now, all of the major computer makers sell similar products.

This year, many Taiwanese computer makers are showing ultralight, full-featured laptops that cost less than $600 and other machines that can operate all day on one battery charge. Meanwhile, American companies like Intel and Microsoft are talking about their chips and software aimed at very thin, cheap laptops and computers with sophisticated touch-screen technology.

Next year, Computex could well stand as the showcase for breakthrough smartphones, as those devices approach the capabilities of basic PCs.

Acer, Asustek and HTC stand out as the most prominent examples of Taiwanese companies entering the limelight.

In the last few years, Acer and Asustek have split off their manufacturing arms and chosen to compete directly against the likes of H.P. and Dell in the PC market with their own brands.

“Acer started doing their own brand, and they started seeing their profits go up and up,” said Joseph Wei, who runs SJW Consulting, a Silicon Valley business that links United States and Asian technology companies. “So the Taiwanese government started to encourage more companies to follow this model.”

HTC used to operate completely behind the scenes, manufacturing cellphones other companies would sell under their names. But by embracing Android, HTC won new attention as the maker of the “Google phone.”

In many ways, Taiwanese suppliers have had little choice but to broaden their ambitions. As the computer industry has consolidated, manufacturers have faced increasing pressure to cut prices. To escape declining margins, they need to diversify.

Some of Taiwan’s manufacturers have invested in Silicon Valley software companies to expand margins and get the inside track on new technology. Mr. Lee’s company, DeviceVM, which makes software for booting PCs quickly, has investments from Asustek and executives at a number of large manufacturers. The story for Mr. Hamblin’s Touch Revolution is similar.

Even the largest Taiwanese companies have started to branch out. Foxconn — which employs more than 500,000 people, mostly in China, to produce Apple iPods, Nintendo Wiis and other popular products — recently hired thousands of software developers and built up its services arm. The company is also working on Chinese-language applications for the iPhone and software for e-readers and Android, according to industry executives.

“I am starting to see a bunch of the manufacturers try to climb up the value chain,” Mr. Hamblin said. “They know that they have to build software teams and tie into content now.”

-----------------------------
BY ASHLEE VANCE
Source:The New York Times

Copyright 2009 The New York Times Company.

0 comments:

 

Copyright 2008-2009 Daily IT News | Contact Us