Asus hopes "awesome" update, court victory will please customers, revive sales

ASUSTek Computer Inc. (TPE:2357) gained the enviable position of having its Tegra 3-powered Transformer Prime -- a powerful keyboard dock enabled Android tablet design --become the official flagship tablet of Google Inc.'s (GOOGAndroid 4.0 Ice Cream Sandwich mobile operating system.  Reviews of the tablet were generally positive, however, the hybrid notebook-cum-tablet has been plagued with problems ever since.  

I. Transformer Prime -- the Turnaround

Despite strong preorders, early purchasers were met with a host of frustrations, including GPS and Wi-Fi issues.  The GPS was reportedly so flaky that it bordered on uselessness.  Enthusiasts were also outraged that the tablet featured a locked bootloader.  ASUS, for its part, did its best to address these issues.  In January -- roughly a month after launch -- it delivered an over the air update (Firmware V9.4.2.7) to fix the Wi-Fi and GPS issues, along with other minor performance tweaks.  And in February it caved and released a bootloader unlock tool [available here].

Now the company continues to try to mend broken fences.  News just hit yesterday that a judge sided with ASUS, throwing out a lawsuit bought by Hasbro, Inc. (HAS), owners of the Transformers (think 80s cartoon, Michael Bay) franchise.

Transformer Prime, display

Hasbro had alleged "trademark confusion", pointing to the fact that in the Transformers film franchise, robots disguised themselves in the shape of consumer electronics, including a ThinkPad from Lenovo Group, Ltd. (HKG:0992).

But U.S. District Court of the Central District of California, federal judge Judge Philip Gutierrez struck down Hasbro's request of a preliminary injunction in a 25-page-ruling.  While acknowledging the strength of Hasbro's "Transformer" and "Transformer Prime" trademarks, he chastised Hasbro, saying that "transformer" was an accurate description of the Asus notebook-cum-tablet hybrid and that ASUS made no attempt to sell its product based on associations to the fictional robot franchise (although news media did do this -- yep, that includes us).  

Clearly a Transformers fan, he started his explanation of why the suit was unfair, stating, "The Autobots are led by the virtuous Optimus Prime character, while the Decepticons follow the powerful Megatron. According to Hasbro, Optimus Prime is intended to epitomize honor, duty, leadership, and freedom."

While the case will still go to trial, the judge's statements cast serious doubt on Hasbro's chances.

II. Update Also in Store

Now ASUS has delivered some more good news.  It promises an "awesome" update for the Transformer Prime.  
While the teaser posted to the company's official Facebook page offered no details of what was so "awesome" about this firmware drop, a translation of an "accidental" post to the company's Swedish Facebook page provided more potential details of the coming update.

Reportedly V9.4.2.21, the update is expected to contain new HDMI output modes, a new power profile, support for USB to LAN cable accessories, support for Ad hoc Wi-Fi connections, configurable unread email notifications from the lock screen, and more.  The update reportedly will land on March 30, according to talk in the XDA Developers forums [1][2].

III. ASUSTek Inexplicably Poor Sales

The update raises the question of whether all this good news will be enough to revive the hype train of the Transformer Prime.  While ASUS fixed most of the outstanding issues of the device and continues to add nice features to the device, it's still struggling with the deflation of its initial hype and with trying to shed a distinction that every Android device-maker dreads -- "buggy".

And a bigger question is whether now-confirmed reports of poor sales are more than just backlash against the device's problems or indicative of deeper production issues.

Sales figures for the Transformer Prime were released in the court decision, stating that the company had delivered --as of Feb. 24 -- only 2,000 preorders, and another 80,000 units to retailers worldwide.  If those figures sound bad, it's because they are. (Granted, this was a month ago, but it seems unlikely things have changed substantially.)

(The original piece indicated that the Tegra 3 was built on Taiwan Semiconductor Manufacturing Comp., Ltd. (TPE:2330) problem plagued 28 nm node -- this is incorrect, the Tegra 3 is built on the 40 nm process, which has also had past issues.)

It's unclear where Asus's issues in its supply chain lie, given that it's using a mature 40 nm SoC and there doesn't seem to be anything particularly unique about the rest of its components.

Recalling that, Inc. (AMZN) in December was reportedly cancelling U.S. pre-orders on Transformer Prime placed in November, it seems clear there is some issue, the compelling question is what that issue is.

In short, the good times are rolling for current Transformer Prime owners who are enjoying a steady stream of updates to the Prime, making their device a much more solid experience.  

Things are not so merry for Asus.  The company's tablet is seeing a perfect storm of bad -- unable to keep up with demand.  That storm is far from over and ASUSTek is surely bemoaning the success of rival Apple, Inc. (AAPL) whose third generation iPad tablet set preorder records selling and shipping millions of units.

While the Transformer Prime is no iPad, it perhaps could have seen modest sales like the original Transformer, which had issues of its own.  Despite those issues the predecessor in Summer 2011 was shipping 400,000 units a month, thanks in part to abundant supply of its Tegra 2 SoC, which was produced on a mature 40 nm process.  Let's just say 400,000 per month is a whole lot better than 82,000 total in three months.

The good news, at least, is that the first generation Transformer suffered from similar component shortages, which limited production to 10,000 a month, but Asus was able to eventually remedy the situation and crank up production.  Let's hope for competition's sake that it pulls off a similar accomplishment with the Transformer Prime.

Source: Scribd

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