Tag Archives: Acer

What happened to Taiwan’s Acer and HTC?

Two of Taiwan’s most prominent high-tech brands, computer vendor Acer Inc. and smartphone-maker HTC Corp., are feeling the pinch. Both have come off the competitive battlefield worse for wear, reported Commonwealth monthly. With Apple’s growth slowing and Microsoft’s acquisition of Nokia after unsuccessful forays into mobile devices, this winter will definitely bring a reshuffling among these high-tech giants.

Acer, founded 37 years ago, is Taiwan’s standard-bearer of brands, but has suffered two consecutive years of heavy losses and is not showing any signs of recovery.

Sixteen-year-old HTC has lost NT$900 billion (US$10 billion) in market value in just two years and this downward trend has continued in the third quarter of this year. HTC is forecasted to ship about 20 million smartphones this year, barely half the total it shipped at its 2011 peak. And now, it is in danger of being overtaken by Chinese smartphone brand Xiaomi, launched just three years ago.

However, if HTC chairwoman Cher Wang is worried, there were no signs of this during an interview with Commonwealth. “I think smartphones are still in their infancy, with still plenty of opportunities, such as smart cities. There are inevitably ups and downs when building a brand.”

Taiwan’s small home market a disadvantage

Without a big home market, Taiwanese high-tech companies are naturally at a disadvantage in the crucial area of defining standards, such as source codes and basic communications patents. Taiwan is also not interested in adopting the Korean model of pouring the entire country’s resources into forging one big brand, like Samsung.

“A small country has to consolidate its resources. To some extent, it has to have the capitalist spirit,” said Chiu Yi-chia, the dean of National Chengchi University’s Graduate Institute of Technology, Innovation and Intellectual Property Management. Taiwan’s high-tech policies, Chiu said, put too much emphasis on fairness and diversity, making the industry akin to being a sheep (socialism), with a skin of wolf (capitalism). As a consequence, Taiwanese tech brands are inherently at a disadvantaged without a concentration and not enough sustaining strength to take on the global market.

Internationalization is not the only key for growth

From Acer, AsusTek to HTC, everyone is up against the same fundamental challenge. If you want to fight a global battle, you need international talent. “Taiwan does not have a national image or market development advantages to sell, so Taiwanese companies must rely on above average salaries when hiring top international talent,” observed Bei Lien-ti, a professor at National Chengchi University’s Department of Business Administration.

Commonwealth reported that Acer and HTC have paid top salaries to attract an internationalized sales force, but it has not translated into improved results. “Can we really call using a bunch of foreign executives to make a bunch of cross-border acquisitions internationalization?” asked a resentful former HTC manager.

So why are Taiwanese tech companies unable to work with an internationalized team over the long term? “Because Taiwanese do not have boards of directors with strong functions and sound operations,” said Chiu. He notes that the management of Taiwanese tech brands generally depends too much on an all-powerful CEO. “Only if the board mechanism is sound can the company build the strength of its management step by step,” Chiu said.

Understanding the market to cultivate niche

Commonwealth noted another key to brand marketing is in finding an appropriate price point based on the product’s positioning in the market. But because HTC’s customers have largely been telecom operators and Acer’s customers have been distributors, neither has been able to get a firm grasp of the end user, making it more challenging for them to develop insight into consumer needs.

HTC relied on its edge in technology, including producing the first Android smartphone, to become the preferred supplier of telecom operators around the world. But after rising to the height of the industry, HTC neglected the rapid shift in the smartphone market to mid-range and low-cost models.

“Small countries can still outwit bigger rivals, as long as they understand how to focus,” said Liu Shuen-zen, a professor at National Taiwan University. Taiwan can open a new battlefield and cultivate B2B brands, he suggested, pointing to the Swiss model as one worth emulating.

“Switzerland emphasizes precision and focus. Through its sharp concentration and technical proficiency, Switzerland commands 80 percent of the global market for currency ink, and its watches generate high margins,” said Liu, who believes Taiwan could also become a global “hidden champion” in several niche markets.

Acer and HTC both posted losses for the third quarter, and their short-term prospects remain uncertain. But considered over the long haul, the hard road traveled by Taiwan’s high-tech brands remains worth pursuing. After all, success is built on the pillars of failure, noted Commonwealth.

Taiwan’s NARLabs signs Letter of Intent to cooperate with Plug and Play

With the goal of enhancing “global excellence, local impacts,” Dr. Liang-gee Chen, president of Taiwan’s National Applied Research Laboratories (NARLabs) led a delegation to California from June 23 to 30. Among one of the trip’s highlights was the signing of a LOI between Chen and the Sunnyvale-based Plug and Play Technology Center (PnP) President Canice Wu on June 24. PnP is a renowned global accelerator specializing in cultivating the next generation of revolutionary technology start-up companies.

The LOI signed by NARLabs and Plug and Play opens up new prospects for Taiwan’s innovative teams, offering more hands-on experiences, funding opportunities, social networking and added exposure to the highest technical caliber of assistance. It is the type of cooperative efforts sought by Taiwan’s National Science Council (NSC) to stay at the forefront of the technology industry.

On the home front, NSC has also worked hard to encourage entrepreneurial programs aimed at helping Taiwan’s young innovators to start their own business. One such program is called FITI, From IP (Intellectual Property) to IPO (Initial Public Offerings), combining the resources from Taiwan’s business and government sectors. Administered by NSC, NARLabs facilitates the program to assist young innovators in taking their ideas from the drawing board to the marketplace.

As part of FITI, an Entrepreneurial Camp is set up consisting of 200 teams. The program is chaired by Acer’s Founder Stan Shih, who selects the top four to six teams for final consideration in August.


Taiwan’s PC industry faces stiff competition from Apple

Taiwan’s seemingly ever-buoyant electronics industry was shaken recently when it emerged that one of the island’s leading computer manufacturers – Quanta Computer – has had to lay off 1000 employees as a result of the severe competition from Apple Inc. In addition to personal computers, display panels, DRAM, the solar energy and LED sectors are all suffering a serious over-supply problem. The Commercial Times questioned what is to become of Taiwan’s personal computer and electronics industry.

Currently, Apple, Samsung and HTC are the world’s leading three smart phone firms, with the iPad, social networks and cloud computing considered the hottest technology areas at the moment. The price to earnings ratios of Hewlett-Packard, Dell and other PC makers worldwide recently fell below 10, far behind Apple’s 16. Taiwan’s major computer manufacturers have all suffered significant losses. When the Apple iPad entered the market, Acer’s share price was NT$90 (US$3), it has since plunged to NT$33 (US$1.10).

Chen Chin-wen, advisor of the Asia Pacific Industry Analysis Association in Taiwan said in an article published in the paper that even Hewlett-Packard, the world’s No.1 personal computer manufacturer is struggling to compete with Apple. In the past, Taiwan benefitted from the horizontal division of labor, but now the island’s high-tech firms are suffering from the emergence of vertical integration. Chen pointed out that “Taiwan has changed from being an active protagonist to acting as a passive supporting player.”

Over the last 18 months, Taiwanese technology companies have failed to come up with a strategy to cope with the competition from Apple and Samsung. Although devices made in Taiwan fully support the Android system, the integration capability of Android in terms of hardware and software has not yet been able to compete with the iPad.

While Taiwan has become a giant in the world of personal computers, creating huge employment opportunities in China, their operational headquarters in Taiwan has not seen much momentum in profitable growth.

Chen noted that Taiwan’s computer manufacturers have survived many crises over the last 30 years, and thus he remains confident that the industry will again pull through. The reasons for Chen’s optimism rest on a number of factors. Firstly, Taiwanese companies are set to introduce new models of the Ultrabook laptop computer next year. As such, they are unlikely to suffer from the anticipated negative growth in the notebook market. Secondly, the iPad is still not able to compete with notebook computers commercially. The new operating system, Windows8, will help to create a new profit base for PCs and Notebook computers in 2012. Thirdly, the rise of cloud computing will bring huge business opportunities for Taiwan’s servers, network attached storage (NAS) and fiber-optic communications. Cloud computing of the internet data center (IDC) is predicted to be the most exciting sector of the personal computer industry next year.

Chen stressed, that starting next year, Apple may hit a bottleneck in its innovation breakthroughs, as the once bright and shiny Apple products are no longer so attractive. The open source side of personal computing is set to launch a massive counter-offensive against Apple’s dominance in the market offering an opportunity for PC makers to fight back is 2013.

Acer, Asustek, HTC make Taiwan a smartphone Mecca

Three Taiwanese companies are putting Taiwan’s technological prowess on display in the handheld world of smartphones, reported Taiwan Review. HTC, Asus and Acer, three of Taiwan’s top electronics manufacturers are joining this competitive global market.

According to the International Data Corp., an international market research and analysis firm based in the United States, worldwide smartphone shipments jumped to 54.7 million units in the first quarter of 2010, close to a 52 percent increase from the first quarter of 2009. iSuppli Corp., another US-based market research firm, predicts that the worldwide growth of the segment is likely to continue, expanding 35.5 percent this year

Smartphones are getting more popular because they are not just cellphones, but also offer video viewing, internet browsing, multimedia gaming, e-mailing, calendaring, contacts, and global positioning system (GPS) navigation. With a slew of new models scheduled to hit the market this year, HTC alone is predicted to ship a total of 16.8 million handsets this year, a 44 percent jump from 2009.

HTC – from OEM to a brand name

The Taiwan Review story credited HTC for putting Taiwan’s smartphone industry on the international map. According to US-based industry tracker Gartner Inc., HTC’s global market share in the smartphone sector rose to 6.9 percent in 2009 from 6 percent in 2008, making its devices the world’s fourth most popular behind those of Nokia (Finland), RIM (Canada) and Apple (US), respectively.

HTC began in 1997 by manufacturing personal digital assistants (PDA) on a contract basis for companies like Compaq Computer Corp., Dell Inc. and Hewlett Packard Co. In this respect, HTC shares a common history with Taiwanese computer giants Asustek Computer Inc. and Acer Inc., which started as original equipment manufacturers (OEM) or original design manufacturers (ODM) before going on to develop their own brands.

As early as 1999, HTC began developing and testing touchscreens for smartphones, with the first shipment of touchscreen models as an OEM shipped in 2002. In 2007, HTC changed direction significantly, deciding to launch its own smartphone brand. A more difficult challenge was overhauling its business strategy from satisfying the demands of companies like Compaq or Dell to serving end-use consumers.

According to Taiwan Review, the company made a splash in the smartphone industry by launching sales of the HTC Touch, the first finger-friendly touchscreen smartphone, in the United Kingdom on June 5, 2007. Apple’s iPhone, which many people viewed as the original touchscreen smartphone, actually began selling in the US market on June 29, 2007, some three weeks after the Touch.

Fierce competition and rivalry

In the early years, HTC’s models were solely based on Microsoft’s Windows Mobile OS. In November 2007, when the Open Handset Alliance released its Android OS, HTC grasped the platform’s game-changing potential and launched the sale of its first Android-based smartphone in the US the following October. Since then, HTC has maintained its position as the biggest maker of smartphones running on Android with models like Hero, Legend, Desire, the Droid Incredible and Evo 4G. Next, the company debuted Nexus One, a phone made by HTC bearing its brand and Google’s.

In April, HTC unveiled the first smartphone with a price tag below NT$10,000 (US$313) according to the Taiwan Review. In the spirit of forging ahead, they hope to bring the devices a step closer to the mass market and break the stereotype that smartphones were only affordable for people with deep pockets. Retailing at US$247, the HTC Smart is targeted at emerging markets such as India and China.

HTC’s fast expansion has struck a nerve among some of its rivals. In March 2010, Apple filed a lawsuit in the US District Court in the state of Delaware as well as a complaint with the US International Trade Commission (ITC), accusing HTC of infringing  20 patents related to the “user interface, underlying architecture and hardware” of the iPhone.

In May this year, HTC fired back by filing a counter-complaint against Apple, asking for an injunction on the sales of that company’s popular iPhone, iPad and iPod in the United States. In a complaint lodged with the ITC, HTC requested that the import and sale of Apple gadgets be halted in the US due to infringements of five HTC patents.  

Forging a strong brand identity in a crowded market

While HTC has remained the technology leader in Windows Mobile and Android phones, its weakness in brand awareness and economies of scale could constrain growth. HTC, however, is taking steps to improve its brand awareness with its worldwide “Quietly Brilliant” advertising campaign, the Taiwan Review reported.

In addition to foreign rivals, HTC also faces growing competition at home. Asustek Computer Inc., the inventor of the notebook computer, which has quickly won over consumers with its affordable price tag and easy portability, is increasing its visibility in the smartphone market by emphasizing navigation capabilities.

Furthermore, Asustek joined forces with US-based GPS device maker Garmin Ltd. in February 2009 to make and market smartphones under the joint Garmin-Asus brand. Garmin-Asus introduced just its third model in February this year, but the company says it plans to accelerate its release cycle by launching at least one new smartphone every quarter this year. While shipments for 2009 were “small,” the company aims to ship at least 500,000 smartphones this year, which excludes their sales in China.

In April, Asustek announced that American service provider T-Mobile would begin selling the Garmin-Asus A50 later in the spring. The A50 is an Android-powered smartphone that will deliver a fully integrated Garmin navigation experience.

HTC also faces increasing competition from Acer, which made its first official foray into the smartphone arena early last year after merging with local handheld device maker E-Ten Information Systems Co. in March 2008. Acer refuses to reveal its smartphone shipments for 2009, but says the company aims to ship 2-3 million units this year.

Taiwan has made steep inroads in dominating the information technology industry. Acer has become among the three biggest players in the worldwide personal computer industry, while Asustek has found a spot among the top five notebook makers. With HTC leading the charge, it is easy to see Taiwan becoming one of the world’s most successful producers of branded smartphones as well.

Taiwan aims to develop top brands

The Bureau of Foreign Trade (BOFT) of the Ministry of Economic Affairs recently announced the results of Taiwan’s Global Brand Value Survey. According to the survey, the top five brands valued over US$1 billion included Acer, HTC, Asus, Trend Micro and Master Kong, respectively. The top four belonged to the IT industries while Master Kong belonged to the food industry.
According to BOFT, the survey was intended to encourage Taiwanese entrepreneurs to create their own brands which would then grow into internationally known brands. Taiwan aims to have a local brand in the world’s top 100, with at least a threshold value of US$3 billion, within ten years.

OEM sector shakes off economic downturn, earn record profits

Despite the continuing global economic woes Taiwan’s original equipment manufacturers (OEMs) are emerging with their heads held high. While their 3 to 4 percent profit margin may seem rather unspectacular, these statistics hide a resurgence that is hard to ignore, according to the Central News Agency. In fact, through innovation, expansion and cost control, many Taiwan OEMs have actually earned record high profits in the wake of the 2009 financial crisis.

What is even more surprising is the fact that despite a fall in profit margins from 15 to 4 percent Taiwan’s notebook OEMs have rolled out record high earnings in the last three years.

Companies with record high after-tax profits in 2009 and exceptional earnings per share (EPS) include: Quanta Computer with profits of NT$22.3 billion (US$6.9 billion) and EPS of   NT$6.09 (US$0.19), Compal Electronics with profits of NT$19.2 billion (US$6 billion) and EPS of NT$4.91 (US$0.15) and Wistron Corporation with earnings of NT$9.135 billion (US$285 million).

Constant innovation is the key

Unlike their Chinese counterparts, Taiwan’s OEMs do not rely on low labor costs to make a profit. The main reason behind the continued survival and growth of the island’s notebook OEM manufacturers is their continual technological innovation and their ability to add value to their products.

Perhaps an industry with a 3 to 4 percent gross profit margin does not merit a discussion and maybe a sector that does not evolve is destined to stagnate. Indeed, in order to survive, every business must innovate. Some OEMs have made the transition to a brand name in their own right, for example ASUS and Acer. Although this transition is difficult to achieve, companies can create new value, according to the Central News Agency.  The key is “diversified developments” in a common direction – from desktop computers  to notebook computers,  and  extending to the 3C industry (computer, communication and consumer electronic parts), televisions, auto parts, medical equipment, and even furniture and furnishings.

In the future, not only 3C industries will be high-tech. Technology will be integrated into automobiles, furniture and even home furnishings, making these smart electronic products as well. Taiwan’s OEM industries have expanded from the 3C industry gradually to infiltrate every corner of the home, thus expanding their market. Furthermore, these companies will form alliances to create new business opportunities.

After twenty years, Taiwan’s OEM sector has accumulated ample experience in production technology and design capability. In the face of the booming Chinese market, Taiwanese businesses believe they have what it takes to compete.  The industry is aided by a new generation of creative design elites who have studied abroad, combined with the experience of the older generation of production management, making the partnership ready to handle the Chinese market. At this point, the growth of the Chinese economy provides Taiwan businesses with many mouth-watering opportunities.

Brand name versus OEM?

In the tussle between brand name and OEM, OEM leaders know where their commitment lies.  Speaking to the Central News Agency,  T.H. Tung, chairman of Pegatron, which spun off from ASUS in 2008 to focus on the OEM business, said that design expertise and the foundry will be at the core of the  business and will comprise  the true value of Pegatron.

Ray Chen, general manager of Compal Electronics, is also pragmatic when it comes to what is important and believes the 3 to 4 percent profit margin is a smoke-screen. “Do not underestimate us … ignore the gross margin figures, pay attention to the solid profit rates and profit numbers,” he stressed. Of course, everyone dreams about his brand, but not everyone can realize that dream … better to understand one’s own expertise, and take full advantage of it,” he said.