X-bit labs

Asus Eee PC Set to Become Second Largest Revenue Source for Asustek.

Category: Mobile

by Anton Shilov

[ 12/26/2007 | 10:15 AM ]

With Asustek Computer Inc. set to spin off its contract manufacturing businesses into separate units, the parent company itself will have to maximize its revenues with popular Asus-branded products. While traditionally Asustek have been known for its mainboards and relatively high-priced notebooks, the company believes that its affordable Eee PC notebook will become the second largest revenue source in 2008.

Asustek Computer expects to sell 300 thousand Eee PCs in January, 2008, with shipments for Q1 2008 reaching a million of units. The company’s current goal is to sell approximately 5 million low-cost Eee PC computers throughout the whole year, which indicates that sales of Eee PC are projected to accelerate at a rather rapid pace. Hong-Kong-based Apple Daily news-paper (which article was partly translated by DigiTimes web-site) reports that Asustek expects Eee to become the second most significant revenue source for the company in 2008.

Asustek Computer’s brand business involves a broad lineup of products, including computer mainboards and add-in-cards, notebooks and smartphones, servers and communication equipment as well as multimedia and consumer electronics devices. Currently notebook business is the largest source of revenue for Asus with mainboards following not far behind. Provided that Asustek sells 5 million Asus Eee PCs, which retail for $299 - $499 in the U.S., for $250 per unit in average,  the company’s revenue for Eee will reach $1.25 billion. Earlier this year the company indicated that brand business revenue for 2007 would reach $7.6 million.

The world’s largest maker of computer motherboards, Asustek, has been very optimistic regarding sales of its Eee PC so far with the first months of sales being relatively successful. In fact, Asus expects to capture 20% of the world’s PC market in 2010 with its Eee, the company recently indicated.

“I think the chance of surpassing 20% in 2010 is very high because there will be further [Asus Eee] products in the future,” said Jonney Shih, chief executive of Asustek, in an interview.

But given that Asus Eee PC now has relatively low-performance hardware amid simplistic operating system, its success is not inevitable even despite of the low price.

Currently Asus Eee PC utilizes Linux operating system (OS) and will also be sold with pre-installed Windows XP a little later. Microsoft ceases to sell Windows XP in mid-2008 and either Asustek will have to continue only with Linux OS or install higher-performance components to make Windows Vista system work. Given that current configuration of Asus Eee PC will hardly be able to work with Windows Vista due to relatively slow microprocessor, limited amount of system memory, low-capacity solid state drive, low-resolution monitor and the lack of advanced graphics adapter, the manufacturer will have to substantially upgrade Eee PC before transiting to Vista. Using more advanced components will inevitably drive the price of Asus Eee PC upwards, which means that the company will not be able to position it as a truly affordable solution. If Asustek decides to go on only with Linux OS, its Eee PC will hardly become really popular due to tepid acceptance of Linux among general public.