Abstract

With the trend towards service integration, VoIP has become one of the most important value-added services for integrated service providers. The intense competition between broadband providers and pure voice service providers has encouraged continuing integration of product functions, so as to be able to provide residential users with an even wider range of value-added services. From Taiwanese equipment manufacturers' point of view, both the development of new types of integrated VoIP device and the addition of new functions to existing products offer opportunities for growth. An examination of the supply chain in the Taiwanese residential VoIP equipment industry shows that, in the past, most of the Taiwanese companies involved in the manufacturing of VoIP equipment were engaged in OEM production, making VoIP equipment for branded vendors or for service providers. While a handful of companies - such as Honhai and ASUSTek - were able to leverage their high production capacity and stable customer relationships to achieve economies of scale on OEM production, most Taiwanese OEM manufacturers were surviving on wafer-thin margins. To improve profitability, Taiwanese manufacturers focused on building up their R&D capabilities so that they could reposition themselves as ODM providers. They began to involve themselves in more segments of the supply chain, including software and hardware design and component sourcing. Despite the rapid downward trend in the price of residential VoIP equipment, Taiwanese manufacturers have been able to maintain reasonably high profit margins by implementing an effective division of labor with chipset providers, logistics services providers, and branded vendors. Some Taiwanese firms have built up the R&D and manufacturing capabilities needed to collaborate directly with VoIP service providers such as Skype and TelTel, and to secure a larger share of the telecom bid market; others are developing own-brand products, and expanding into sales and service activities.

Appendix

List of Companies