Biting Into Apple Proves Profitable for Many Taiwanese Suppliers

Despite news of Steve Jobs' bout with pancreatic cancer and its potential impact on the launch and marketing of the Apple iPad, seen as the segment leader and wave-maker among ever-more popular tablet PCs, the attraction of the mobile device segment over the past year has yet to subside. As expected and in line with typical practice in the ITC sector, Taiwanese PC and handset makers have launched competitive models to join the fray this year.

Before the iPad became a device to be reckoned with in the fiercely competitive segment, many market observers scoffed that the new device is nothing more than an iPhone on steroids, offering various reasons to justify such doubt. For example, iPad's poor integration with other software as Adobe Flash shook PC retailers' confidence, who believe such shortcoming impedes businesspeople, professionals who demand desktop-PC-quality online access, software operation on-the-go. However, better-than-expected sales of iPads that quickly exceeded over 7 million units within six months after the launch on January 27, 2010 have silenced all detractors.

To further expand market share, Apple has launched the iPad 2G this year to consolidate its market-leading specifications and performance. Besides being 33% thinner than its predecessor, the iPad 2G has a 1GHz dual-core A5 processor and front, rear cameras with FaceTime and HD video recording, as well as improved graphics, faster processing and longer battery life of 10 hours.

The comparatively lower unit prices of iPad 2G is also a plus. One with 16GB memory and WiFi sells for US$499 each, but one with WiFi + 3G SKU and 64GB memory retails for US$829. Apple is promoting the iPad 2G first in the U.S., and plans to start campaigns to market the device, starting March 25, elsewhere as Australia, Denmark, Finland, France, Germany, Greece, Italy, Japan etc.

Apple's Lead to Remain
Market observers hold firmly that Apple's lead in the competitive landscape will remain, with sales of iPad 2G expected to reach 35-40 million units to take up the majority share of an estimated 60 million tablet PCs forecast to be sold worldwide this year. The bad news is that Taiwanese players, along with other rivals, are left to fight over the remainder of the market.

HTC
Aiming to duplicate its success in promoting smartphones, HTC Corp. is betting on its first tablet Flyer to be a serious competitor in the increasingly more competitive segment this year.

Debuted at the Mobile World Congress (WMC), staged February 14-17 in Barcelona, Spain, the Flyer has a 7-inch touchscreen, a 1.5GHz processor and supports HSPA/WCDMA communication, runs on Google's Android 2.3 OS, has 1GB storage, 32GB flash storage onboard, a front-mounted 1.3-megapixel and a rear-mounted 5-megapixel camera. Priced at around US$600 each and slated for launch in April, the Flyer is cheaper than Samsung's Galaxy Tab that retails for between US$650 and US$900.

Flyer still has potential to be a hot-seller, for it features good compatibility with value-added software, pre-installed video download software HTC Watch, and can support On-Live games based on cloud computing. HTC's Flyer product lines have reportedly been ordered through August even before being put on sale, with industry insiders projecting some one million Flyers to be sold this year.

Acer
Impacted by shrinking sales of netbook PCs in the U.S. due to popularity of iPads, Acer Inc., a globally top-3 PC maker, is forced to refocus on tablet PCs, having unveiled the Iconia Tab series to rival Apple.

Acer also chose the WMC to debut five tablet PC models with screen sizes of 10.1, 7 and 4.8 inches, all of which runs on the Android 3.0 OS, which became an issue among insiders due to the firm's achievements in the global PC industry.

To accelerate its entry in the segment, Acer recently announced its partnership with American telecom AT&T to jointly promote its 4G tablet Iconia Tab A501 stateside starting in the second quarter of this year.

The 4G tablet Iconia has a 10.1-inch touch screen, Nvidia's Tegra 250 dual-core processor, and runs on Google Android 3.0 OS. The breakthrough in function is its compatibility with TV and built-in 4G LTE (long term evolution) modem. The device, whose retail price has yet to be set, will be promoted along with AT&T's launch of its LTE services.

Acer is also cooperating with Verizon to promote its Iconia Tab A500, its first tablet featuring wireless transmission based on the 4G LTE network. The partnership was officially announced at the CES (Consumer Electronics Show), held January 10-13 in Las Vegas, paving the way for Acer to tap the American tablet segment.

To build a full tablet PC range with low and high-end products, Acer plans to launch its first Android 3.0 tablet, Picasso.

Asustek
Another Taiwanese and globally top-5 PC maker Asustek Computer Inc. is drawn to the segment by the huge business potential, having launched several tablets.

Asustek's ace-in-the-hole is the Eee Pad Transformer, which runs on the Android 3.0 OS, has a 10.1-inch touchscreen with high resolution, dual camera lenses (1.2-megapixel and 5-megapixel) and optional docking station with a QWERTY keyboard. The device has NVIDIA Tegra 2 dual-core processor for better performance. Slated for launch this April, the Eee Pad Transformer tablet with Wi-Fi and 16GB of storage will retail below US$600 each.

Another feature-packed tablet is Asustek's Eee Pad MeMO, which has a 7-inch capacitive multi-touch screen with 600X1024-pixel resolution, equaling iPad's, and has Qualcomm's dual-core 1.2GHz 8260 processor and 64GB memory.

The 3G MeMO is also WiFi capable, with two camera lenses (one 5 megapixel rear-mounted with flash and one 1.2-megapixel) and runs on the Android 3.0 OS. To be sold this summer, the MeMO with 8-16GB of storage will retail for US$690 each, and ones with 32-64GB for US$960.

Winners
Regardless of how many PC makers survive the fierce competition later on, others in Taiwan along the supply chain stand to profit.

The Hon Hai Group, the world's largest EMS (electronic manufacturing service) provider, will likely be the biggest winner after securing Apple orders, which has pushed the group to rev up production in China.

Also Quanta Computer Inc. and Compal Electronics Inc., the world's top-two notebook PC suppliers, are sharing orders to make Acer's Iconia, with Pegatron Corp. making Asustek's Eee Pad Transformer. Inventec Corp. will turn out HP's tablet running the Web OS that will go on sale in June. Qista Corp. will make Dell's Android 3.0-installed tablet, while Quanta will roll out RIM's PlayBook.

Suppliers of parts and components are also expected to profit, including TPK Holding Co., Ltd. and Wintek Corp. (touch panels), Largan Precision Co., Ltd. (optical lens modules), Simplo Technology Co., Ltd. and Dynapack International Technology Corp. (batteries), Unimicron Technology Corp. and Tripod Technology Corp. (high-density interconnection boards).