Revenge of the Taiwanese Manufacturers

For the longest time, (mostly) Taiwanese companies such as MSI, ECS, Foxconn, Acer, Abit, DFI, and Shuttle have escaped notice because they produce products that aren’t well-differentiated. Things like motherboards, A/V solutions, bluetooth receivers, video cards, sound cards, and a variety of other electronics sold at retail by OEMs such as Dell, HP, and Gateway come from these Taiwanese manufacturers. They rely on retail sales because they, being Taiwanese, naturally suck at creating effective marketing for an English-speaking audience. I’m sure many readers have had issues with incorrect grammar and spelling in things like manuals and ads. Also, these companies, save for Asus and Gigabyte, have been unable to distinguish themselves because they compete on price rather than branding or product segmentation. Besides the reputation for “quality” that the two aformentioned companies enjoy, most shoppers and OEMs will not bother choosing between brands on matters other than price. This cutthroat market is known for its low profit margins and high churn/turnover, and this is especially dire in graphics cards. Various names in the industry to come and go (mostly go) over the years are Sapphire, Hercules, XFX, Soyo, eVGA, FIC, Biostar, Gainward, and Leadtek.

Well, now they’re storming back with a vengeance. The NYT reports that Atom-powered netbooks and nettops built by these Taiwanese companies (the surviving ones at least) are making inroads and are displacing traditional PCs as computers of choice for many people. When Atom was first announced, I warned that Intel must be very careful not to cannibilize its own product line because so many people do nothing more than surf the internet and process office documents. Well, now it’s happening, but Intel makes a decently fat profit margin on each Atom processor sold, so it’s not an issue for them.