ASUS Falls Victim to PC Market Decline, Turns to Chromebooks, Phones
November 18, 2013 7:52 PM
Once the the fastest growing OEM, ASUSTEK Computer becomes the latest victim of the PC slump
Taiwanese electronics OEM ASUSTek Computer Inc. (
) in Q2
and Q3 2012
was roughly tied for the
world's fastest growing PC maker
the Interactive Data Corp. (
). Now its seen that streak of success collapse as
poor sales of Windows 8 PCs
catch up to it.
I. Windows 8 Finally Catches up to ASUSTEK
large percentage of consumers have rejected Windows 8
, PC sales have predictably suffered, but the extent to which it has suffered has been eye-catching. The market has posted the
biggest percentage declines in unit sales in the history of the Windows PC
. And ASUSTEK -- once a poster-child of sucess has now become the new face of the consequences of Windows 8's market failure.
In Q3 2013, while Dell and Hewlett Packard Comp. (
) saw virtually no year-to-year growth (0.3 and 0.4 percent growth, respectively) and Lenovo Group, Ltd. (
) posted an anemic (but market leading) 2.2 percent growth, ASUSTEK watched its fellow Taiwanese OEM Acer, Inc. (
) drop 34.5 percent in unit sales.
The ASUSTEK Windows 8 Transformer Pad
This wasn't exactly unexpected; Acer lost 9.6 percent of sales from Q3 2011 to Q3 2013 as well.
What was much more shocking was that ASUSTEK -- just a year ago tied for the title of fastest PC sales growth -- saw a massive decline in sales (34.1 percent) that virtually tied it with Acer in market decline.
The good news for investors is that ASUSTEK was somewhat shielded from this decline by its offerings in new markets, including the tablet market. Tablets are ASUSTEK's second largest product category, accounting for 20 percent of the company's total earnings.
Despite the decline in PC unit shipments, ASUSTEK managed a modest NT$4.94B ($167.6M USD) profit. A year ago ASUSTEK made NT$6.71B ($227.1M USD) -- so that's a drop of 26 percent. Most of this came from NT$1.52B ($51.58M USD) in "one-time" tax expenses,
a report by
The Taipei Times
. It is unclear what these charges pertained to. Those taxes aside, net profit declined 3.7 percent on a YoY (year-to-year) basis.
ASUSTEK was hit by a major one-time tax charge in Q3. [Image Source: Reuters]
Revenue was down 4 percent at NT$107.079B ($3.63B USD). Analysts had expected NT$110B ($3.73B USD), according to a
survey - a 2.7 percent miss.
Analysts hoped for earnings of NT$9.03 ($0.306 USD) per share. Instead they saw NT$6.65 ($0.226 USD) per share -- a major miss -- due largely to them being blindsided by the tax charge.
Q4 should prove critical to ASUSTEK. The OEM
remains relatively hopeful
, an overhaul to the troubled Microsoft operating system, will improve on Windows 8's laggard sales.
II. Tablets Remain a Bright Point
ASUSTEK's chief financial officer, David Chang remarked, "We remain optimistic about the desktop and laptop market, but our priority is to make the company’s smartphone business turn a profit next year."
As the rocky PC market continues to erode, ASUSTEK -- once a champion of Windows 8 -- is turning to alternatives. In Q3 ASUSTEK song strong sales of Google Inc. (
Nexus 7 tablets
, which run the latest version of Google's mobile Android operating system. Retailing for a modest $230 USD for the 16 GB second-generation variant, these 1080p tablets helped ASUSTEK to 3.5 million units of total sales.
The Nexus 7 (second gen.)
That was good enough to earn third place in the tablet market (with 7.6 percent of total sales), behind Apple, Inc. (
) and South Korea's Samsung Electronics Comp., Ltd. (
). It's worth noting that it's a pretty distant third place, though. Samsung is estimated by the IDC to have sold 9.7m tablets (roughly three times what ASUSTEK sold), while Apple is estimated to have moved 14.1m iPads in the quarter.
ASUSTEK is vying with Lenovo and other firms for the contract to produce the third-generation Nexus 7 tablet, which is expected to launch sometime early next year. Comments ASUSTEK CEO Jerry Shen, "We are still in talks [about the Nexus 7 orders]."
If it gets the order, ASUSTEK believes it can sell 13m tablets next, year, which would likely be good enough to remain in third place.
Looking to go down the road Samsung did, ASUSTEK is looking to expand its fledgling Android smartphone effort into a bigger global brand next year. Mr. Shen told investors; "Asus aims to grow its smartphone business from about 1 million units this year to 5 million units next year."
In its home nation, ASUS's
has thus far sold well. ASUS plans to grow the Padfone and Fonepad/Memofone (the Padfone's phablet brethren) global lineup in 2014. Mr. Shen said new smartphone models would be unveiled at his company's
2014 Consumer Electronics Show
keynote this upcoming January.
III. Haswell Powered Chromebooks in the Pipeline
Like HP, Acer, and Samsung, ASUSTEK also revealed that it's eyeing Chromebooks as a potential escape route should the Windows 8/8.1 flop continue. ASUSTEK is planning tentatively to release an 11.6-inch model priced at $199 USD and a 13.3-inch version for $249 USD,
The Taipei Times
. According to
a separate report
, these Linux laptops will feature 14 nm
processors from Intel Corp. (
). The same
report states that Toshiba Corp. (
), another top ten PC OEM, will also release new Chromebooks in H1 2014.
If accurate, that would make them one of the cheapest
laptops to date. These models will like follow a similar model to Acer's recently released C720 Chromebook, which features a 1.4 GHz
Celeron chip, 2 GB of DRAM, a 16 GB SSD, and an 11.6-inch screen
. A similar Acer model retails
with 4 GB of DRAM. These notebooks are current the #5 and #4 (respectively) top sellers on Amazon.com, Inc.'s (
) notebook computer marketplace.
Intel at its annual developer forum in September
suggested in a teaser slide that ASUSTEK
Chromebooks were incoming
. Currently Dell is the only top-five PC OEM not to offer a Chromebook.
Intel teased at the ASUS Chromebook announcement at IDF.
fast-inheriting the netbook legacy
and driving Windows out of the budget space. After Microsoft
began to slowly mothball Windows XP
netbooks space appeared all but dead
, perhaps taken over by tablets. Now it appears that the problem was the netbooks, but was Windows all along, given that netbooks are seeing a resurgence, driven by Google's Linux-based Chrome OS.
Sundar Pichai, the head of Chrome browser and Chrome OS development, was
recently put in charge of Android
and is reportedly working to merge the two operating systems' APIs and tree. If Chrome OS gains access to Android's massive app catalog that could spell the beginning of the end for Microsoft Windows in the budget-to-mid-range laptop market.
Indeed, a report from
suggests that Microsoft CEO candidate Stephen Elop, Microsoft's current devices chief, is pushing his company to focus mostly on mobile devices when it comes to consumer operating systems, and on enterprise products -- and
shuffle effort away from consumer versions of Windows for notebook computers
. He's reportedly advocated further opening up full versions software offerings like Internet Explorer and Microsoft Office for other platforms (such as Chrome OS or Android). Such a move could prove a prelude to an exit of the low-to-mid range PC market, as it would erode Microsoft's advantages over ChromeOS and other rivals in terms of software availability and familiarity.
Stephen Elop is
currently on a shortlist of candidates to become Microsoft's next CEO
. Microsoft's search committee,
chaired by top shareholder, former CEO, and company co-founder Bill Gates
is expected to announce sometime this month or next month.
Of course it Mr. Elop or not, it's perfectly possible that Windows could rebound and continue to be a strong forced in the notebook market. Microsoft did move 80 million units (to warehouses) compared to about 1 million Chromebooks. However, Chromebooks appear to be faring far better in direct sales to consumers (which are not in that IDC metric), given their sales on Amazon. Still the take-home message is that Windows may be down, but it remains the dominant power in the market, until Chromebooks or something else come along and grow sales to a more significant volume.
Despite waivering support, Windows 8 notebooks still comprised the bulk of ASUSTEK sales.
relative fizzle of wearable computers
-- a supposed "next big thing" -- ASUSTEK plans to remain open to the possibility of a smartwatch or similar device. It said it will introduce a wearable computer offering at the June
trade show in Taiwan. The wearables segment has been
continuously dredged up since the 1980s
, when it was first introduced by high-tech Japanese firms, such as smartwatch pioneer Seiko (Holdings Corp. (
Bloomberg [analyst estimates]
"It's okay. The scenarios aren't that clear. But it's good looking. [Steve Jobs] does good design, and [the iPad] is absolutely a good example of that." -- Bill Gates on the Apple iPad
Is Microsoft Trojan Horsing Itself? CEO Candiate Elop Reportedly Wants to Break up Company
November 8, 2013, 12:30 PM
Microsoft Shortens List of Potential CEOs
November 5, 2013, 11:25 PM
Microsoft Rolls Out Windows 8.1
October 17, 2013, 11:52 AM
Microsoft Investors Want Bill Gates to Resign From Post Amidst Windows 8 Woes
October 2, 2013, 8:01 PM
IDF 2013: Intel Distances Itself From Windows 8, Microsoft
September 12, 2013, 11:31 AM
Are You in the Market for Earphones?
March 24, 2017, 7:35 AM
Samsung Galaxy S8, Rumored Launch Date!
March 18, 2017, 6:45 AM
How about Leica Cameras
March 13, 2017, 6:30 AM
Nokia has ditched this camera technology in its new smartphones
March 7, 2017, 8:45 AM
A Baseball Cap With Camera
March 3, 2017, 7:00 AM
Nokia 3310 with longer battery life
February 28, 2017, 7:05 AM
Most Popular Articles
Apple iPad – New Faster Processor and More Fun
March 22, 2017, 7:25 AM
OnePlus 3T – 5.5” Optic AMOLED and Dash Charging Technology
March 23, 2017, 8:45 AM
Comparison – Samsung Galaxy TabPro S Vs Microsoft Surface Pro 4
March 21, 2017, 7:40 AM
Huawei P8 Lite 2017 – Android 7 Nougat Smartphone with Octa-Core Processor
March 8, 2017, 7:03 AM
Gigabyte GA-Z170X-Gaming G1 – Intel Thunderbolt 3 Certified Motherboard
March 9, 2017, 6:25 AM
Latest Blog Posts
More Apps From Google
Mar 28, 2017, 7:15 AM
Are you thinking of performance and speed? Intel claims:
Mar 25, 2017, 7:45 AM
Apple buys an automation app called Workflow. The deal was completed today and brings the app along with its developers.
Mar 23, 2017, 7:35 AM
Apple Announces new color for iPhones and iPads
Mar 22, 2017, 7:45 AM
Instagram: You Can Now Save Live Videos For Later
Mar 21, 2017, 7:49 AM
Samsung Galaxy S8 to Get New Color Scheme
Mar 20, 2017, 7:45 AM
What else to worry about?
Mar 17, 2017, 6:45 AM
Icon of the Day: Intel/ NVIDIA or Mobileye
Mar 16, 2017, 6:15 AM
JUST IN - Twitter Hijacked : High-Profile Account Accesses
Mar 15, 2017, 7:07 AM
Mar 14, 2017, 7:30 AM
News and Tips
Mar 13, 2017, 6:30 AM
iPhone 8 – May Not Get Curved Screen
Mar 11, 2017, 8:00 AM
California paves way to self-driving car tests without humans
Mar 11, 2017, 7:18 AM
Smart Machines V hackers
Mar 10, 2017, 7:00 AM
Uber Can Resume Autonomous Car Testing in California
Mar 9, 2017, 6:50 AM
Mar 8, 2017, 7:09 AM
Mar 7, 2017, 8:45 AM
World news 3-6
Mar 6, 2017, 5:40 AM
Mar 4, 2017, 7:40 AM
Mixed News of the Day
Mar 4, 2017, 6:32 AM
Jaguar Land Rover invests in ride-sharing
Mar 3, 2017, 7:00 AM
Mixed News of The World:
Mar 2, 2017, 7:02 AM
More Blog Posts
Copyright 2017 DailyTech LLC. -
Terms, Conditions & Privacy Information