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Acer Founder Stan Shih:

The Netbook Is the Big Chance for Brand Taiwan

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Taiwan's senior statesman of technology ponders the potential for the latest, lightest PCs to make Taiwan's name in world history.

The Netbook Is the Big Chance for Brand Taiwan

By Hsiao-Wen Wang
From CommonWealth Magazine (vol. 417 )

That Taiwan took the lead in introducing netbook computers is proving very important to the development of the global PC industry. Wintel (the combination of Windows software and Intel processors) has developed to a watershed moment, as consumers are now discovering that the computer's original functions have been repackaged into a new product that is cheaper, lighter and easier to use, and this realization is stirring renewed buying interest.

In a mature industry, Taiwan's enterprises can play a very significant role. They have the ability to develop a clear profile of consumers, innovate continuously, and roll out low-cost, inexpensively priced products with good value while maintaining margins that are not too low.

How to transform netbooks into a new market, a new product and a new type of differentiation is a big challenge, but new entrants can best find their future positions when the market is undergoing change.

Second- and third-line vendors have a major opportunity, but as with every new opportunity, it will be grabbed by stronger companies that have competitive advantages, such as in product innovation and distribution management. The netbook market will be mature in two to three years, and less prominent vendors must find a sustainable core competence within the sector before it matures.

Core Competence Defined

A core competence cannot rely on simply one strength, such as R&D or innovation. Doing business requires a complete package, and companies must develop effective distribution management and brand marketing if they are to survive over the long term.

When any new opportunity arises, it has to be grabbed early. But enterprises must also really think about why they are in business in the first place and gradually build their core competence to stave off bigger competitors.

As soon as the big brands jump into the netbook market, they will definitely use their scale, distribution, and technological advantages to carve out a share for themselves. But if new entrants can chart their course and build their own beachhead before the big players find their stride in the market, they will at least be able to stand on their own and survive.

In fact, size does not predetermine the winners in the PC market. More important is being relatively big within a specific field. I have always stressed the need to be the best and biggest within a contained market. In the netbook market, you can target a specific business, application or niche and quickly settle on a strategy to become relatively good in that area.

Why will the market for netbooks become mature within three years? First, the technology is already mature. Second, the market has been spun off from an existing market, but it is still a relatively new market that companies can segment and gradually expand through innovation while broadening their consumer base and range of applications. There is still considerable room for the convergence or integration of netbooks and iPhones, with new niches for new applications and new users waiting to be exploited.

Now netbooks and smartphones are competing in the same telecom distribution channels, and that's why consumers can enjoy good products at low prices. This is the most powerful engine driving the opening of new markets. Competition across industry segments is extremely beneficial to consumers, and pushes markets to expand more quickly. For the pie to grow bigger, applications and competitive pressure must emerge from many diverse sources, which spurs the more rapid development of new products and stimulates consumption.

Taiwan's Brands Have a Shot at Success

Netbooks could be the starting point for Taiwan's high-tech industry to snowball and could present the first opportunity for "Brand Taiwan" to emerge victorious. Netbook sales could surpass 100 million units in a short period of time and displace currently established models. History rarely offers such a major opportunity in a single product line. The Aspire One, for instance, pulled in NT$10 billion in one month on sales of more than 1 million units. And when it comes to this opportunity, Taiwan is in the game.

Taiwan did not have readily available brands when previous opportunities rolled around, but this time, more than 70 percent of the market is in the hands of Taiwanese brands. In the future, if Taiwan can control a 50-percent share of this market segment of converging netbook and smartphone technologies, "Brand Taiwan" will definitely triumph in this field. This level of popularity and future recognition will be broader and more powerful than the brand awareness Taiwan attracted through personal computers.

Surpassing the United States

Compared to Japan, South Korea and the United States, Taiwan's competitive strategy is simply to fight a long-term battle. From the first day I founded Acer, I always said that I was fighting a 50-year war, because with time, our competitors would grow tired of the struggle. The U.S. will drop the fight if margins are too low, and Japan will abandon the battle if a product doesn't gain traction in their culture. In terms of netbooks and other less expensive products, Taiwan has an absolute advantage in going after markets with larger populations.

When people look back on the history of the IT sector's development in 20 year's time, they will first think of the U.S., which acted quickly and made important contributions. But they will then note that it passed the baton on to Taiwan, a very strong member of the relay that proved it could run farther and more extensively. From this perspective, Taiwan has the opportunity to surpass the U.S. in making substantive, lasting contributions to humanity.

Interview and compiled by Hsiao-Wen Wang

Translated from the Chinese by Luke Sabatier


Chinese Version: 台灣打出品牌的第一個機會

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