Taiwan in transition

"This is disruptive and this is my first notebook that I travel with. It is stylish and bullet proof. It gives me a pleasant Internet experience (over a smart phone). There is a blue ocean of innovation in a powerful PC market," he said.

But Shih is not stopping at just notebooks. He wants the EEE brand to be on gaming consoles, the EEE stick gaming remote, EEE TV, EEE monitors and two other EEE products that are confidential, he said, but will be released later on this year.

Web 2.0 has created a new market for Asus, Shih said. The EEE PC is targeted as a second notebook and for emerging countries. "The EEE PC is a whole new concept and is not seen as a replacement for the original notebook," Shih added.

O'Donnell concurred in his report, saying that ultra low-cost notebooks are a potential solution in developing countries and as a secondary devices in mature markets. He also said these types of notebooks would do well in the education market.

This switch in philosophy has also changed the way Taiwanese vendors look at Canada and the U.S.

Take, for example, GigaByte Technology Group, which is known to North Americans primarily for its motherboards. GigaByte is expanding its product line to include notebooks, smart phones and a few other products that are unimaginable.

Similar to AsusTek, GigaByte has a separate OEM/ODM business unit. Over the past few years GigaByte has been busy creating a diverse product line including communications products, desktop servers, multimedia devices, peripherals, the G-Style notebook and sub-notebook and its GSmart smart phones.

But unlike Asus, who's slugging it out with better known brands in Canada and the US, GigaByte is choosing to stay away from the North American market for now.

Richard Ma, senior vice-president of corporate strategy for GigaByte, said the North American market is the last priority for the company.

GigaByte is a half billion dollar world player in computing and one of its more innovative new products is a smart phone called the GSmart. This device has a GPS, motion sensors, a five mega-pixel camera and finger touch screen capability.

You won't see the GSmart in Canada or the US, and the reason is that GigaByte does not want to compete on price with RIM, Nokia, Apple, Motorola or any other vendor.

Ma said he considers GigaByte pricing to be affordable, but the company isn't interested in slashing prices to compete with other vendors.

Sarah Su, the GigaByte marketing manager, said the phone would cost more than $500. Ma wants to sustain margins for this product and he said the company has a better chance of that happening domestically and in Europe than in North America.

"North Americans are too price sensitive," Ma said. "Consumers can buy this product and return it in 30 days and IT products have narrow margins. The market is big, but many different channels always let the products widen and go into the price competition."

GigaByte intends to make innovative products and not price-competitive products, Ma added.

Su said they would eventually enter the North American market, but it would take at least another year. She said GigaByte does not have the resources to mount a competitive assault on the Canadian and US market places. They would rather concentrate on markets where customers are will to pay more for more features.

Ma said that, as it stands now, GigaByte hardly makes any money in Canada or the US on motherboards. He believes South American, Russian and India markets provide more growth opportunities.

Taiwan computing used to be known for making other company's stuff. Foxcon in Taipei makes Apple's iPhone for example.

But that is not the case any more.