Taiwan producers of computers and peripherals are retooling their factories to launch new, gadget-filled laptops and hand-held devices to satisfy a growing consumer lust for stylish computing. Firms such as Asustek Computer Inc and MiTAC International Corp that have been making products under contract for other global brands are now churning out new designs to win their own share of the lucrative consumer pie.
At Computex, the world's second-largest computer fair, Asustek showcased shiny, colourful laptops that can take pictures from a camera fixed on the top of screens. The notebooks are also equipped with tuners allowing users to watch television.
"PCs are moving toward a world that demands more entertainment and digital services, and it's a path that we must follow," Sunny Han, an Asustek marketing director, told Reuters.
Long a powerhouse for computer motherboards, the US $2.5 billion Taiwan firm has aggressively diversified into notebook PCs and cellphones to boost meagre sub-contracting margins.
Asustek's new VENTO 3600 case for powerful gaming computers is also grabbing attention as standard PCs fall out of style. The sleek cases look more like a sports car or space ship than a computer.
Asustek's strategy reflects a wider trend among Taiwan tech companies - contract suppliers to multinationals such as Dell Inc and Hewlett-Packard Co - beefing up their ability to innovate and create their own brands.
Global sales of laptop computers are seen rising over 25 percent this year, outpacing an expected 3 percent growth for desktop computers, estimated Jim Wong, head of Acer Inc's IT product business group.
"It will be a good year for mobile products," said the executive from the world's number-four PC vendor, which is promoting its latest Ferrari 4000 notebook, a machine coated in carbon-fibre black with the coveted 'Prancing Horse' logo to target image conscious users.
"Growth of desktops is not high in developed countries but that of laptops is good in developing countries," said Wong.
While high oil prices, rising global interest rates and a weak US dollar are curbing corporate tech spending, computer manufacturers think the consumer turf is still worth exploring as the idea of a one-size-fits-all PC fades.
Taiwan's top electronics components maker, Hon Hai Precision Industry Co, is selling its "Foxconn"-branded motherboards and oven-size casings to consumers in the clone market who want to build their own powerful computers.
Hon Hai expects sales of Foxconn parts this year to increase seven-fold from 2004 as the do-it-yourself PC market grows.
In the smaller handheld computer market, personal digital assistants (PDAs) are also being sexed up to lure buyers.
MiTAC is making PDAs that allow car drivers to navigate with global positioning system (GPS) receivers. Its latest PDA offers digital maps and doubles as an MP3 player. Smaller rival Polstar Technologies Inc exhibited a similar GPS device with bluetooth functions at Computex.
"Integrating and innovating technology products is where opportunities come from. New products always have a higher contribution to margins," MiTAC President Billy Ho said.
MiTAC launched its first GPS PDA in late 2003 and sells about a third of its GPS products under the Mio brand. Ho said PDA sales will grow by "several times" this year from 2004, after selling 500,000 units globally in the first quarter.
The firm also supplies to electronics distributors such as Medion AG and Typhoon Exploration Inc.
Investors have taken note of MiTAC, pushing its shares to their highest in five years on Tuesday. The stock has almost trebled since last August. CLSA last month initiated coverage of the Taiwan stock with a "buy" recommendation.
"We've seen a shortage of such PDAs," CLSA analyst Vincent Chen said. "However, we are afraid many competitors will emerge soon and the life cycle of such PDAs is a bit longer than that of cellphones and it takes longer to see replacement demand."
MiTAC shares trade at around 10.6 times expected 2005 earnings, against 11.6 times for Asustek, 15 times for Acer and 14.5 times for Hon Hai.
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