Asus gets disruptive in new E-era

Taipei, Taiwan – Without publicly saying it Jonney Shih, the chairman and CEO of Asustek Computer Inc. (TSES: ASUSTEK), put a big bulls-eye on Apple Computer Inc. (NASDAQ: AAPL).

The longtime original design manufacturer, based here, is in the midst of dramatic change led by Shih vision’s of creating a worldwide brand for Asus.

Earlier this year Shih put the wheels in motion to separate Asustek into three independent business units. Asus will be the main brand, while Pegatron will be its OEM manufacturing arm along, with producing motherboards and other computing components. The third business unit is called Unihan, and it will handle non-PC manufacturing such as cases and molding.

Shih said the new vision for Asus would not necessarily mean a new channel strategy, but he did say there would be a new approach towards its channel. Its motherboard channel in North America gives Asus a base to work with, and Asus plans to train this base to attend to the needs of the local market.

“The most important thing for the channel is to blend together and provide the best value products in the local market. Get feedback from customers and then respond quickly. We have to combine this together. This is a challenge for Asus, and to be very honest we do not do this very well. We need to drive this hard,” Shih said.

He’s also trying to change the culture at Asus from a manufacturing one to a company that has research and development, engineering and innovation as its core strengths. “We will pursue technology and aesthetics to perfection.”

Shih describes Asus’ innovation approach as a DaVinci code of experimentation; imagination and dreaming that can be quickly created into a prototype.

“I ask employees to think about creating a masterpiece,” he added. In fact, Asus displays a portrait of the Mona Lisa made up solely of motherboards in its front desk reception area.

Since Asus is late to market with its notebook products, industrial design has become important. The company has put the finishing touches on its first leather bound notebook and is also working on an energy efficient notebook made from bamboo.

However, the company’s biggest success so far has been the Intel-backed EEE PC sub-notebook, which initially shipped with Linux as its OS, but now runs Windows XP.

Best Buy in the U.S. has seen EEE PC sales jump 60 per cent, Shih said. He added that Best Buy initially listed Asus as Tier 4 brand, but then upgraded them and made the EEE PC and other Asus notebooks available in 500 stores.

“Best Buy helped us with awareness against Apple and we’ll be driving hard in the next two years. It’s a big target and it’s the last stronghold for us,” Shih said.

Bob O’Donnell, vice-president, clients and displays at IDC, forecasted the worldwide ultra low cost notebook shipments will grow from less than 500,000 units in 2007 to more than nine million in 2012. Average selling prices for this category will be less than $3 billion in that same year.

The EEE PC is priced anywhere from $195 to $399. The three “E”s stand for economical, easy to use and excellent Internet experience, according to Shih, who came up with the name.

“This is disruptive and this is my first notebook that I travel with. It’s stylish and bullet proof. It gives me a pleasant Internet experience (over a smart phone). There is a blue ocean of innovation in a powerful PC market,” he said.

However, Shih is not stopping with just notebooks. He wants to the EEE brand to be on gaming consoles with the EEE stick gaming remote, EEE TV, EEE monitors and two other EEE products that are confidential, he said, but will be released later on this year.

Web 2.0 has created a new market for Asus, Shih said. The EEE PC is targeted as a second notebook and for emerging countries. “The EEE PC is a whole new concept and is not seen as a replacement for the original notebook,” Shih added.

O’Donnell concurred in his report, saying that ultra low-cost notebooks are a potential solution in developing countries and as secondary devices in mature markets. He also said that these types of notebooks would do well in the education market.

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Paolo Del Nibletto
Paolo Del Nibletto
Former editor of Computer Dealer News, covering Canada's IT channel community.

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