Taiwan computer makers plot against Apple

A computer manufacturer sits stoically, his necktie knot loose, pondering one question: What are we going to do about the iPad?

It’s the Disney of computer shows. The possibility of something once thought impossible coming true hangs above the maze of gaudy booths and dazzling displays of electronic gadgetry slated for to go on sale in the second half of the year.

There are tablet PCs with detachable keyboards – easier for typing than the usual touch screen – laptops with built-in speakers as powerful as an external setup and half-phone, half-computer handheld devices with 3D displays.

Tech firms from across the world come with showgirls to vie for the attention of corporate buyers, among the 36,000 people expected at the show. A fantasy fulfilled could be a lucrative deal to install microchips in a PC maker’s latest gadgets or finding a bulk buyer of portable computers designed for business use.

The show, Computex Taipei, also serves another purpose: To demonstrate the growing depth and sophistication of Taiwan's high-tech industry. Taiwanese companies hope to show how far they've moved from the days when "Taiwanese electronics" meant contract manufacturing for overseas brands.

But for many Taiwanese vendors, this years Computex, which ended on June 4, was a disappointment. Their Silicon Valley rival Apple Computer had stolen the show.

Rather than enjoying the glitz and glam, Micro-Star International Vice President Henry Lu sat stoically, his necktie loose, in a private conference room pondering one question: What are we going to do about the iPad?

Just outside, his sales people were showing off the Taiwanese firm’s tiny tablet computers, barely one percent of the company’s overall notebook PC business. But Apple’s hot selling touch-screen tablets, the iPads, were getting most of the attention.

“It’s like Darwinism with a lot of species trying to differentiate themselves. One will emerge,” says Jamie Lin, founding partner of the venture capital firm appWorks Ventures in Taipei.

Tablet sales for all brands are expected to reach 69 million worldwide this year, with Apple anticipated to control 69 percent of that market. Over 290 million will sell by 2015, market research firm Gartner says.

The brewing tablet wars were evident at this years show. About 50 vendors displaye their own versions, battling against Apple head-on. But Mr. Lu isn’t sure that will work. It’s hard to beat the starting iPad price of $499, for one thing, he says. So Micro-Star International, or MSI, is trying a different approach.

The company has dedicated 200 employees to studying tablet PC software, allowing it to design more applications for the hardware that has driven the company for 25 years, mostly supported by contracts. Part of Apple’s success, Mr. Lu noted, is its application store for iPad users.

Seeking to differentiate itself from Apple, MSI is targeting its product at banks, schools, hospitals and corporate executives who want a mobile PC that’s lighter than a laptop, rather than at general consumers.

Taiwan’s two top brand-name PC makers Acer and Asustek Computer, for their part, are using their world name recognition to take on Apple by packing mainstream-market tablets with accessories that Apple left out. Those include USB ports and detachable keyboards.

Computex gave Taiwanese tablet makers a boost by putting their wares side by side with ultra-cheap ones made by mainland Chinese brands whose haphazardly assembled parts may not perform well together.

Taiwanese firms, given their experience, are coming out with solid quality on the cheap, tech analysts say. That in the end could be the Darwinian edge they need.