Asus success causes trouble - splits off notebook division

Asustek reportedly to spinoff notebook, keep motherboard and game console units

Ruby Huang, Taipei; Joseph Tsai, DigiTimes.com [Friday 30 March 2007]

Asustek plans to separate its own-brand notebook business under its wholly-owned subsidiary Asusalpha Computer while keeping the motherboard and game console business under Asustek, according to industry sources. Taiwan-based notebook makers, however, feel that such a move would weaken Asusalpha's competitiveness in the OEM market.

Though Dell has placed orders for around one million notebooks with Asustek, the company is demanding that Asustek complete the spinoff of its own-brand notebook unit by the first quarter of 2008 or else future orders from the company may be in question, according to sources at notebook makers. Coupled with the fact that Apple's orders for MacBooks end in November of this year and that future shipments to Toshiba will be limited in amount, Asusalpha might lose competitiveness in the notebook OEM market without Dell's support, noted the sources at notebook makers.

Sales of Asustek's own-brand notebooks improved greatly in the past two years, causing the company's OEM clients, like Sony and Apple, to switch their notebook orders to Foxconn Electronics (Hon Hai Precision Industry) and Quanta Computer, noted the sources.

The sources stated, that though Asusalpha's future in producing notebooks on its own doesn't look bright, the company's production of motherboards and game consoles will have a definite scale and currently is fulfilling orders for the Sony PS3 and noted that the motherboard and game console business will help company's notebook business in terms of economy scale. As most notebook manufacturers have investments either in desktop or game console manufacturing, they are unlikely to give support to Asustek in making Asus-branded notebooks if Asustek is still a competitor in other areas of manufacturing.

A total separation of the production and own-brand business units of Asustek is the most suitable course of action for the company, the sources indicated, noting that such a move would allow a greater development of the OEM and own-brand segments for the company.

Source: http://www.digitimes.com/systems/a20070323PD207.html

 

I cant decipher whether thats good or bad.

I dont want them to make mac books though i want the asus brand to be larger.

 

it is very good for barebone line. we all want asus ensembles to spiral into the abyss of no return (well some dealer do and some dealers dont, the ones who provide 100% in house service/labor do not benefit from selling low markup ensembles which are warranted by asus, meaning there is no emphasis on dealer support). if asus is forced to retreat from selling under their own name it means cheaper pricing and better barebones. this ofcourse will not happen because they have no plans of evacuating from the "pre-built" market. asusalpha among others is just a name and is not final. originally asus came out with the same strategy like compal and clevo. barebones were their bread and butter as they were our b&b. now a days their barebone line is practically gone and most of their shipped product are ensembles

 

It simply means that the clients are starting to notice that the ODMs (original design manufacturers) are starting to infringe on their territories. And since Dell, in particular, is suffering because the new trendsetter is the consumer, not business, they're especially concerned that ASUS is starting to show up in Best Buy.

My best guess for market share leaders in 2012:

1. Lenovo
2. ASUS
3. Acer
4. Apple
5. HP
6. Dell

 

Lenovos... ur kidding me

My bet is on HP

 

Dell will set up global procurement center in china next to wall mart before they loose #1 spot. asus will never be in the top until they can reduce their product lines to an exact science. dell will never loose their #1 spot so long as they still offer 499$ notebooks and have an incredible client base mostly made up people who dont know the difference between windows and blinds and who think dell is #1 ranked in the industry for home support. hp is trying to take their "super computer literate client base" by offering the same garbage notebooks. they are really competing with each other. asus does not want to and should not want to enter that game. there is very little margin there for the odm and the oem alike.

in 2012 this is what you will see:
1. dell or hp
2. hp or dell
3. asus (odm and oem production alike)
4. acer
5. apple
6. ibm
The list has nothing to do with quality. its stricktly quantity

 

Terrible, terrible news, but I saw this coming back in August when I was researching laptops. Asus makes laptops for Dell, Sony, and Apple. Asus also makes laptops that compete with Dell, Sony, and Apple, without the additional markup the third party OEM's place on their models. When I bought my notebook, a similarly configured Dell---possibly made by Asus then rebranded Dell---cost at least $300 more. It was only a matter of time before the bigwigs at Dell realized that Asus was becoming more of a competitor than a partner, and try to nip this problem in the bud by pressuring Asus through their business relationship. Trust me, Dell's executives don't care if it's the Ensemble or Barebones line of notebooks, they just want Asus out of their market.

So make no mistake about it, this is a thinly veiled attempt by Dell to disrupt and destroy Asus's growing popularity in the notebook industry. Asusalpha is incapable of producing and maintaining numbers of laptops on par with its parent Asustek, and this transition will produce a great number of headaches in management, distribution, production, quality control, and sales. All of which mean that it will be harder for us consumers to get a better notebook for a lower price. Either the price of future Asus laptops will rise, or the quality will fall.

 

This is good news!!!!
Anyone whos ever been in top management or worked for a really big company will understand why Asus is doing this. When a company gets really big its best to break off in smaller internal companys that can sustain its own profitability. They all become independent under the umbrella of the mother company Asustek.

Theres a number of great advantages for Asus to break off their retail laptop division and become wholely seperate from its wholesale parts and other oem laptop manufacturing.
As Asus becomes more and more popular and competive its best to keep the high quality of the Asus brand off the same assembly line as their other built-on's (Apple, Dell etc).

Its like how Acura/Honda and Lexus/Toyota keep their seperate factories even thou we know Honda and Acura are the same company.

To keep the buyer perception of Asus's high quality laptops, its not a good thing to know they are built side by side to one of those lower end Dells that asus just happens to be manufacturing.

Also, the big plus is the laptop division becomes its own profitable company/entity and it will be buying parts from itself from its wholesale manufacturing division and vise versa. Each will be purchasing from each other and both sides win.

Lastly, the mother company never goes bankrupt if say.... something drastically happens and all of a sudden Asus laptops are no longer wanted by everyone in the world. If such should happen then just the laptop division loses money and it doesnt end up taking down the successful parts manufacturing entity (motherboards etc) of Asustek.

Believe me... in a few years when you dish out your hard earned money again to buy a nice Asus laptop... you'll be happy to know it didnt come off the same line as some crappy $600 Dell.

 

I guess if ASUS were to manufacture $600 notebooks, they would be crappy too. The ASUS A8 series are probably as crappy as the Dell or maybe worse. Add to this, the A8 costs about double ~$1000..

As always, technology updates for the better.

HP has improved their quality. ASUS support is hard outside the USA. I can find Dell and HP everywhere (even in the smallest towns of developing countries.)

ASUS manufactures good notebooks for Apple and Dell due to rules and regulations and whatever other requirements enforced by the two companies.

Heck, if ASUS were really as good as Dell, HP or Apple, they would be the number one notebook company already.

Time will tell. ;-)

 

oh man, you're any dell or HP marketers dream!

 

asus doesnt make 600 dells. They dont make any cheap notebooks. They dont make any dells at all. All the dells for sale are made by compal, quanta wistron and samsung.
They also dont make any hps at all although they have in the past.

The cheapest ones asus make are the macbook, sony fe etc. Next is a toshiba satelite.
Compal makes $500 notebooks like the inspiron b130

I dont think there is any dell built as well as the asus a8js.
Try to follow this. None of the dells are manufactured in a way that can dispirse heat like the a8js. A 17 inch dell e1705 with an ati x1400 will melt its own plastic if you leave it on. And it has 3 fans.
All dells have to be mass produced at such a quantity they could not be precision engineered like an a8js, a 14 inch notebook with a 7700 go. If they put a 7700 go in the e1505 half of them would melt. It is built in quantities of millions and could not be engineered like an a8js.

Because its complicated I can understand if you dont follow.... But the same factory can make 1000 in a day and 10,000 in a day. But the 10,000 have to be built with some real room for error because a lot of them arent going to be looked at real closely.

All dells and hps are mass produced. Some of them are built tough Im not saying they arent. But they are all poorly built, from the top of the line down.

your 4000$ xps 1710 is a yugo with christmas lights. Dell markets their machines by contracts with the computer parts suppliers such as intel and getting to introduce the new parts in its laptops exclusively
e1705 is a peice of crap. But if its the only one with a 7900 gs it sells through the roof.

The main companies asus made laptops for are only apple and sony. They were not allowed to sell an asus branded laptop that competed with the ones they made for sony until 2005 and they werent allowed to sell the asus brand in japan.
This is why the asus brand sold 14 inch notebooks as its largest market. It didnt make that size notebook for sony or apple.
In 2007 they will start making toshiba sattelites, so watch for this next line up from toshiba to be the best things you can get in a retail store, like sony vaios are right now.

 

It'd be a sad day if ASUS stops producing or is forced to compromise on notebooks... There goes another quality product--- losing to quantity logic
*Sigh*

 

Well acutally Asus has a low end model for the average consumer and still has some decent build quality to it.

I have a completed a review on it, but we are doing some last minutes checks and edits on it before, the review is posted.

Here are some sample images of the Asus F5R, priced at $900 USD.









Expect the review to come out in 1-2 days, we doing some last minute checks on the battery and edits.

 

Well, as far as Apple notebooks go, they are plagued with heating issues, burning issues etc.

The Sony SZ series have taken a step back in build quality as compared to the previous SZ builds.

Although ASUS has built these supposedly high quality notebooks for Sony & Apple, I am not saying that ASUS is behind these issues.

Just because ASUS is going to build Toshiba sattelites, I would'nt be quick to jump to the conclusion that satellites are going to be the best.

It is hard to say exactly how much ASUS contributes (in terms of engineering) to product quality when building Apple and Sony notebooks.

ASUS is probably figuring out what works and what does not. 5 years down the line, they could say, hey lets cut down on build quality and get people to upgrade on a 2 year cycle. Maybe they are already deciding this on their $1000 notebooks..

 

I agree & they'll probably be mass producing the Toshiba Satellites to meet the demands....

 

While we all would like to think that there are still quality manufacturers left in this game, the opposite is true. The name of the game in Asia is volume, and that invariably means making a lot of compromises. While ASUS makes our favorite laptops, even they are starting to cut corners in order to secure marketshare as the A8Js proves.

Glad that they were chosen by Lamborghini to make the V2x. I ordered one yesterday, because, unfortunately for us, if we want high-quality lines like that to survive, we as a community need to invest more in the brand.

But, as many posters who complain all day long about paying an extra $100 prove, we've seen the enemy and it's us.

 

It should be noted that when these ODMs make notebooks for other companies, that they often have budget restrictions limiting on what kind of notebooks they can build, so it isn't fair to judge the quality of an ODM notebook, with the notebooks they build for some one else.

ex: Compal makes some of the Dell Inspirons.. But they also make the Lenovo Thinkpad T series. There's a clear difference in build quality between the two, as well as price difference.

furthermore, Asus WILL build for Dell, but does not build anything at the moment, but soon will.
http://www.emsnow.com/newsarchives/archivedetails.cfm?ID=13656

 

Its more to do with diversification, you cannot expect them to create only the very highest quality notebooks. That would cut their potential market by a huge amount.

They build notebooks of varying quality so that people with different budgets can afford to own a Asus. Same goes with just about all manufacturers, i could think of a 100 car analogies right now.

@MilestonePC, we're been selling that F5R for some time now where i work, not a bad little machine, nice bright screen. only problem is we've chosen to put vista home basic on it for some silly reason.

 

Yes, Goren, I can already hear the Dell guys in an ASUS meeting, "We want you to make us a laptop that's cheap with shoddy quality, I know you don't like to do that, but puhleeze don't ruin our street cred!"

 

Bwahahaha! Thanks Stamar, you made my day.

 

So, why am I the only one who thinks Mercedes and BMW right away?

They both make fabulously high-quality cars and you can score one for little more than a Camry...

 

Quanta makes the mac book pro. asus makes the mac book. I dont like macs so I dont follow it but the one that had heating issues is the mac book pro.
Mac book has passive cooling. This is a design that is silent but will burn you. You want to compare it to other notebooks with passive cooling. It is the top of the line in cooling with this in mind. Asus is the world leader in cooling computer components.

The most recent sz is made by quanta. Asus actually makes the C the cheaper one. Quanta makes 40% of all notebooks they make most sonys apples and toshibas. Dells and hps. Asus is a minor manufacturer in comparison They make a model and then 6 months later they make A different model.

 

There was/is alot of side benefits of having an inhouse notebook brand. Not only were they cashing in on the brand in known markets, their was also manufacturing capacities, R/D/outsoursing resources, volume of parts, enhanced relations with ms and intel in mobility platforms.
They also leveraged its existance to win oem/odm contracts by signing noncompete agreements in certain product classes. Both the ensemble and barebones serve as friendly reminder to the big boys that if they insist on lowering OEM/ODM margins while raising their own prices more and more housebrand would show up on USA shores.
Im not saying if the spin off is a good or bad. If a close relationship is kept, alot of benefits can still be retained.
Dell and HP pit foxconn,quanta,asus et al. against each other all the time. So if asus pushes back occassionally and builts a few solid notebooks in the process, its the consumers that benefit. Its a shocker how out of touch mainstream consumers are in terms cost/benefit. Its always seems wierd to me when the ODM help improve C/P while the market leaders peddle "yugos with christmas lights"

 

I'm going to miss the 'Asus' branding on their notebook if they really splits off. Asusalpha....sounds weird.

 

I reread the Dell story at the beginning and I had to think about a few things.

Asus is making a 14 inch notebook for Dell.
Asus stopped making the w3j.
I give you two theories.

One is that asus is going to make a w3j type notebook and its going to be called the xps 1410. or 1420 or whatever. Only its going to look like the xps 1210 not the w3j.

Ok, or they are just going to make the 14 inch lattitude in santa rosa, and that is going to be more like the w3j was with a mid range gpu

 

There are some misconceptions about ASUS as a ODM for OEM clients. ASUS *does not make laptops* for Sony or Apple anymore. In fact, they lost future contracts to Foxconn and Quanta...because of the exact same reasons why Dell is feeling fussy over ASUS (that there may be a conflict of interest when an ODM begins to manufacture their own products and on top of that, becomes very successful very quickly). Here's the complete DigiTimes article which states the loss of contracts from Sony and Apple: http://www.digitimes.com/systems/a20070323PD207.html

 

I will clear up somantics then.

Asus 'made' the macbook you can buy right now. But they are not making the mac book you can buy in a couple months because fox conn will make that.

Asus made the FE but they will probably not make the FE you can buy in a few months.

They dont make any dells or toshibas you can buy today but they will make some of them you can buy in a few months.

 

In short, Asus will either need to bow down to pressure from the OEM's or find some way of maintaining and expanding their own market in the notebook arena. As all signs seem to indicate, it will be the former rather than the latter.