Abstract

Low-cost PCs' Limited Impact on Taiwanese PC Makers

Both the arrival of the Asus Eee PC and the standoff between Wintel and OLPC demonstrate that the competition in the PC industry no longer focus on price only, but around future growth in emerging markets. Although PC shipments have maintained double digit growth over the past several years, market value growth has long since dropped into the single digits. This indicates that the PC industry is cooling, and that companies must find greener pastures if they are going to be successful in this zero sum game. Cost reduction will hit the bottom line someday; in the future pricing will not be PC manufacturer's only weapon. 

The battle for the low price PC market marks the beginning of another war within the PC industry. It will not have a major impact on Taiwanese companies, which specialize in contract manufacturing. Leading IT vendors in the mainstream market will still dominate the formation of new specifications and growth in the market, though Taiwanese OEMs, ODMs, and component makers may gain some opportunities (for example, 92% of the OLPC XO's components were made by Taiwanese companies) in the low-cost PC trends. Since the stable, long-term partnerships are Taiwanese PC makers' important assets, Taiwanese makers' future will hinge on their capability to support international brands' market development strategies.

As the PC industry has yet to identify each market segment and the size of emerging markets is not yet clear, these markets offer good opportunities for Taiwanese own-brand vendors to expand.  Extending and enlarging current product line-up and customer base so as to introduce new mobile computing products at an appropriate time will be an important factor for Taiwanese own-brand vendors.

Hardware/Software Differences to Challenge Future Network Uniformity

The PC industry has been enjoying a prosperous period. In addition to meeting demand for computing functionality, PC manufacturers are actively recreating the PC, giving it new life and developing killer applications to meet diverse demand. It is hoped that the PC industry will reach new heights following its success in multimedia and Internet applications, or at least extend the current period of growth.

The competition for low-cost PCs indicates that PC makers are trying to reduce PC prices to expand their market share; PC makers have to redefine PCs' value to outperform their competitors. In the future PCs' value (including low-cost PCs) will not be limited to computing, but will integrate data, voice, video, and Internet multimedia services. Although low-cost PCs are targeting educational applications and emerging markets, and are not meant for multimedia heavy applications, they still have to deal with severe IT infrastructure bottlenecks in emerging markets.

The different focuses and strategies of the two low-cost PC camps (Wintel and OLPC) reveal the fact that several issues need to be solved before low-cost PCs enter large scale production. In addition to insufficient Internet bandwidth, hardware and software discrepancies (Windows vs. OSS) will be the major challenge for network uniformity, since current network equipment is based on the logic used by Windows PCs. The same web page will be browsed on different kinds of device (such as the OLPC XO's high resolution screen, the small screen of a Palm-based mobile phone, or a 19-inch PC screen). Therefore, in addition to the various user interface used by the browser on specific devices, websites have to adjust their structures to fit different equipment, bandwidth, and regional requirements. These problems may not be able to be resolved by creating standards, and they are certainly not the fault of low-cost PCs, but as the age of the low-cost PCs approaches, it is one of the key problems facing the final step towards mass production.

Appendix

List of Companies