BEIJING, July 13 /Xinhua-PRNewswire/ -- CCID Consulting, China’s leading research, consulting and IT outsourcing service provider, and the first Chinese consulting firm listed in Hong Kong (HKSE: HK08235), analyzes how successful ASUS and Intel’s bid to bring computers to bring low-end computers to developing countries will be.
ASUS recently introduced low-priced notebooks with Intel’s low-end processors. These products are mainly for low-end consumers in developing countries and are brought into the consumer market through traditional channels. Can the current cooperation between Intel and ASUS achieve the shipment goal of 1 billion sets worldwide?
Firstly, the situation of chip competitions is that in 2005, Intel met with a strong challenge from AMD. This is particularly the case of the low-end market. Due to the strong impact of AMD chips, Intel has had to adjust its Core Due 2 price -- its new 64-bit product, marking a U-turn to its past high quality and high price strategy. The price war has significantly reduced Intel’s profits and affected its shipment to a certain extent. By cooperating with ASUS and introducing $199 PCs, Intel will see its shipment raised to a certain extent. This preemptive strategy in the low-end market aims to fight back against AMD’s challenge.
Secondly, price competitions between PC products show that competitions in the PC industry come more from price and functional differentiations. The $199 price will no doubt be a heavy bomb in the PC market in developing countries. With general-purpose functions met, this price has great appeal to ordinary consumers in developing countries. Within a certain period of time, it can stimulate the market demand, thus raising the level of PC penetration in developing countries. Higher PC penetration will no doubt push forward the development of the whole IT industry and other industries. Under such a situation, Intel can take advantage of its leading position in the chip manufacturing industry and cooperate with ASUS to provide such products. This can produce a huge impact on the low-priced PC market, thus enabling the company to take a dominant position in the low-end notebook market.
Thirdly, in terms of strategy, Intel has long adopted various measures to increase the demand for its products in emerging markets and developing countries, as well as to set the strategic task of providing cheap PCs to consumers in developing countries. It can be seen from the Classmate PC introduced for educational users in developing countries that Intel continues to tap into and segment the market in the developing world. While meeting the demand in the educational sector, it has also developed low-end consumers who have wider demands. Notebooks suiting the level of consumption in developing countries, which Intel has now introduced in cooperation with ASUS, can raise the sales of Intel’s low-end processors and achieve the goal of developing the market in developing countries.
Fourthly, there are big market potentials in developing countries. Due to high PC penetration rates in the United States and Europe, market development there has become more and more difficult. But PC demand in developing countries is fast rising. Middle-income people are the main consumer group there. These consumers have a certain paying power. The potential market demand in developing countries has drawn the entry of various chip makers. The current cooperation between Intel and ASUS shows that both companies have actually seen the market in developing countries. While solving the long baffling problem of ensuring low product price and meeting functional and software needs, the $199 PCs introduced by the two companies can fully meet the PC demand in developing countries and thus get a certain share of the huge market there.
Finally, from the perspective of pushing forward technology penetration in developing countries, the United Nations Global Alliance for ICT and Development (UN-GAID) has set the goal of “pushing forward computer penetration in developing countries, letting more people fully use information and communication technologies, and benefiting more people in developing countries”. The low-priced PC products that Intel has introduced for developing countries can promote technology penetration in developing countries, help meet people’s needs and improve its influence in the public welfare sector. This will further strengthen Intel’s sense of social responsibilities and create new market and business opportunities.
For ASUS, the current cooperation will produce good market effect. As a well-known notebook maker, ASUS has long closely cooperated with Intel. The introduction of the current products will gain ASUS a place in the extra low-priced PC market and offer it a good opportunity to develop the notebook market in developing countries.
Though Intel and ASUS hold good expectations of their current cooperation, it should be kept in mind that while low-priced PC products will cause strong feedback, Intel and ASUS should pay more attention to their product quality and performance. After all, while low price is a focus of concern for users, product performance is an important factor for consideration. The only way for the two major firms to succeed in their cooperation is to provide users with PC products that truly have extra-high price/performance ratios.
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