Abstract

More Time Needed for Two-in-One Product to Gain Traction

Although the competition from Google and Apple is currently still confined to Smartphones and tablets, the declining PC market has forced Intel and Microsoft to derive new applications and product concepts for notebook PCs in order to consolidate their market leadership in the PC market.

The 2-in-1 mobile device concept proposed by Intel at Computex Taipei 2013 is not new. However, Intel's leading position has accelerated integration in the supply chain and prompted vendors to work hand in hand towards the development of 2-in-1 devices, while bringing down costs of new product development. Echoing Intel's 2-in-1 concept, Microsoft introduced the SST (Small Screen Touch) program to offer operating system discounts for models with screen sizes of 11.6-inch and below, thereby enhancing the price competitiveness of small-sized notebook PCs.

In line with the 2-in-1 concept, the operation mode of tablets is added to notebook PCs through the innovative hinge design. This will increase product costs. In addition, consumers are attracted to tablets owing to compact design and affordable prices and are willing to tolerate the inconvenience of no keyboard input and low computing power. Hence, the 2-in-1 tablet/notebook PC hybrids have higher hardware costs than tablets and thus have more difficulties for price reduction. In addition, those 2-in-1 hybrids boasting increased performance do not have the advantage in compact size. Therefore, the 2-in-1 hybrid design seems to be the safest product design strategy but it may not meet most consumers' needs. Nevertheless, the diversification of product designs will help vendors test market acceptance, thereby benefiting future product development.

Learning Curve for Windows 8.1 Remains Steep

Microsoft's Windows 8.1 is the modified version based on the feedback of users using Windows 8. Apart from the return of the Start button and the improvements in application search and word suggestions which provide smoother user experiences, Microsoft also has built in some new functions to enhance added value.

The Windows 8.1 is developed based on changes made with Windows 8 in response to user feedback. However, this does not solve the problems for users who face transition difficulties from Windows 7 to Windows 8 as no improvements to the new functions such as gesture control of Modern UI and the traditional desktop mode are found in the Windows 8.1. That means users still have to go through the learning curve to become familiar with Windows 8.1. Furthermore, the new functions such as enhanced Bing search engine and multi-screen support are not quite appealing to consumers. For example, the multi-screen setup must be performed on a high-resolution screen to achieve the best result. As a whole, Windows 8.1 will enhance user satisfaction, but its impact on generating new consumer demand will be limited.

Brand Value Rises on Reduced Influence of Wintel

Updates of Intel and Microsoft notebook PCs are usually aimed for more software applications and higher performance. With software applications and computing performance nowadays able to meet consumers' basic needs, vendors have focused on wooing consumers with innovative form factor designs to encourage them to replace existing notebook PCs with new models. The development of touch-screen and convertible notebook PCs have set good examples of what they have endeavored to do in this area.

Driven by this wave of changes, branded vendors have deviated from the restraint of Wintel structure and increased product differentiation through unique form factor designs. Since luring consumers to notebook PCs with low-price strategies has become increasingly difficult in the face of the more price-competitive tablets, product differentiation will be essential for products to stand out from the competition. The Taiwanese notebook PC industry has been well-recognized for its design capabilities. In addition, the comprehensiveness of the component supply chain enables Taiwanese vendors to rapidly churn out products for emerging applications. In the past, branded notebook PC vendors failed to create significant product differentiation due to their heavy reliance on Wintel structure. The situation is about to change as the influence of Wintel on notebook PC designs weakens. Product differentiation will play a critical role for branded vendors in the future competition.