Business opportunities from smartbooks and e-book readers: Q&A with Inventec Appliances chairman Jackson Chang
Inventec Appliances is an ODM maker rolling out MP3 players, GPS devices, smartphones, VoIP phones, and 3G data cards, and yet it is also the vendor of OKWAP-brand handsets. In addition, the company has recently unveiled its smartbooks and e-book readers.
During a recent interview with Digitimes, company chairman Jackson Chang provided a look into the development of smartbooks and e-book readers as well as strategies for the company's core products.
Q: Will Inventec compete head-to-head with netbook vendors as it steps into the smartbook production?
A: For many people, the outer appearances, displays and keyboards of smartbooks and netbooks are similar and so they consider these items to be belonging to the same category. But the smartbook emphasizes power saving, slim design, Internet on demand, super graphics capability and user friendly experience, and it integrates telecommunications functionalities and multimedia contents into a customized device, especially for telecom carriers.
So smartbooks may not necessary compete directly with netbooks because netbooks are designed primarily to replace some of applications being performed by notebooks. On the other hand, smartbooks are dedicated to fewer specific applications with ultra thin design and power saving.
Q: Some people have said that Taiwan makers have spearheaded the development of netbooks but also pushed the netbook segment into vicious pricing competition. How do you assess the ecosystem of the netbook industry?
A: I think it is the white-box production ecosystem in China, instead of Taiwan makers, that has caused fierce pricing competition in the netbook industry. Companies in the US and Europe have been able to exercise self-discipline to safeguard the market order, while makers in China are more inclined to break the rules. Taiwan makers are positioned themselves between the US/Europe and China makers with more flexibility.
The white-box phenomenon of the netbook industry will slow down if vendors in the US and Europe impose more requirements on the supply side and Intel does not support white-box makers. Taiwan makers should also avoid vicious competition and instead keep their advantages through market segmentation and product differentiation.
Q: While Inventec is turning out smartbooks, other notebook vendors are also rolling out smartphones. Does this mean that handset makers and notebook vendors are trying to dent a piece of market share from each other's territories?
A: Not exactly. This is a natural trend of industrial development. You cannot confine competition in a specific area because the same kind of products from different companies may have different functions, and yet separate departments of the same company may turn out similar products. So the point is that how to optimize your own competitiveness and find out your own market segments and clients.
Q: How about the development of e-book readers?
A: The mature telecommunications, display, memory and battery technologies have enabled the roll-out of e-book readers as a new multimedia device with great potentials. The convergence of contents and technologies should be able to create a lot of applications and business opportunities as well.
Q: The launches of application stores by Apple and Google have both been successfully, but the emergence of the application stores has also complicated the relationships between handset makers, software platform developers and telecom carriers. What kind of role should handset makers such as Inventec play at this stage?
A: Since the establishment of an application store has a high technical barrier as well as a lot of benefits and impact, the software platform providers have emerged as the powerhouses of varied handset operating systems.
However, without the support and cooperation from handset makers, software platform providers and telecom carriers will have difficulties in fulfilling their services. As a result, handset makers, carriers and platform operators are stepping up cooperation among themselves in order to win market shares while minimizing risks.
Q: Does Inventec plan to launch its own application store since your company has marketed OKWAP-brand handsets for years, and is now rolling out smartbooks and e-book readers which are also application-oriented?
A: Although we have strong R&D teams in Taiwan and China and are developing application software to enhance our product value, we tend to establish cooperation alliances with content or software developers for expanding handset applications.
Q: What are the strategies for your core products given that your company has rather diversified product lines and is not easy to be classified into a particular industry?
A: Smart handheld devices and network appliances are our core products. With regards to smart handheld devices, we are moving from small-size devices to multimedia products, broadband devices and to wireless communications devices, with a number of devices supporting MP3, video player, digital video recording, digital TV and GPS functionalities. In addition, we are stepping into application markets for the business and medical care segments.
For the terminal end network appliances, we have been able to develop e-book readers, VoIP phones, 3G data cards and multimedia controllers based on GSM, GPRS, EDGE, WCDMA, CDMA2000/EV-DO, TD-SCDMA, PHS, 802.11a/b/g/n, Bluetooth and WiMAX technologies that we have built up for the past years. We will continue to develop other wireless telecom devices such as RF gain stages and femtocells.
During a recent interview with Digitimes, company chairman Jackson Chang provided a look into the development of smartbooks and e-book readers as well as strategies for the company's core products.
Q: Will Inventec compete head-to-head with netbook vendors as it steps into the smartbook production?
A: For many people, the outer appearances, displays and keyboards of smartbooks and netbooks are similar and so they consider these items to be belonging to the same category. But the smartbook emphasizes power saving, slim design, Internet on demand, super graphics capability and user friendly experience, and it integrates telecommunications functionalities and multimedia contents into a customized device, especially for telecom carriers.
So smartbooks may not necessary compete directly with netbooks because netbooks are designed primarily to replace some of applications being performed by notebooks. On the other hand, smartbooks are dedicated to fewer specific applications with ultra thin design and power saving.
Q: Some people have said that Taiwan makers have spearheaded the development of netbooks but also pushed the netbook segment into vicious pricing competition. How do you assess the ecosystem of the netbook industry?
A: I think it is the white-box production ecosystem in China, instead of Taiwan makers, that has caused fierce pricing competition in the netbook industry. Companies in the US and Europe have been able to exercise self-discipline to safeguard the market order, while makers in China are more inclined to break the rules. Taiwan makers are positioned themselves between the US/Europe and China makers with more flexibility.
The white-box phenomenon of the netbook industry will slow down if vendors in the US and Europe impose more requirements on the supply side and Intel does not support white-box makers. Taiwan makers should also avoid vicious competition and instead keep their advantages through market segmentation and product differentiation.
Q: While Inventec is turning out smartbooks, other notebook vendors are also rolling out smartphones. Does this mean that handset makers and notebook vendors are trying to dent a piece of market share from each other's territories?
A: Not exactly. This is a natural trend of industrial development. You cannot confine competition in a specific area because the same kind of products from different companies may have different functions, and yet separate departments of the same company may turn out similar products. So the point is that how to optimize your own competitiveness and find out your own market segments and clients.
Q: How about the development of e-book readers?
A: The mature telecommunications, display, memory and battery technologies have enabled the roll-out of e-book readers as a new multimedia device with great potentials. The convergence of contents and technologies should be able to create a lot of applications and business opportunities as well.
Q: The launches of application stores by Apple and Google have both been successfully, but the emergence of the application stores has also complicated the relationships between handset makers, software platform developers and telecom carriers. What kind of role should handset makers such as Inventec play at this stage?
A: Since the establishment of an application store has a high technical barrier as well as a lot of benefits and impact, the software platform providers have emerged as the powerhouses of varied handset operating systems.
However, without the support and cooperation from handset makers, software platform providers and telecom carriers will have difficulties in fulfilling their services. As a result, handset makers, carriers and platform operators are stepping up cooperation among themselves in order to win market shares while minimizing risks.
Q: Does Inventec plan to launch its own application store since your company has marketed OKWAP-brand handsets for years, and is now rolling out smartbooks and e-book readers which are also application-oriented?
A: Although we have strong R&D teams in Taiwan and China and are developing application software to enhance our product value, we tend to establish cooperation alliances with content or software developers for expanding handset applications.
Q: What are the strategies for your core products given that your company has rather diversified product lines and is not easy to be classified into a particular industry?
A: Smart handheld devices and network appliances are our core products. With regards to smart handheld devices, we are moving from small-size devices to multimedia products, broadband devices and to wireless communications devices, with a number of devices supporting MP3, video player, digital video recording, digital TV and GPS functionalities. In addition, we are stepping into application markets for the business and medical care segments.
For the terminal end network appliances, we have been able to develop e-book readers, VoIP phones, 3G data cards and multimedia controllers based on GSM, GPRS, EDGE, WCDMA, CDMA2000/EV-DO, TD-SCDMA, PHS, 802.11a/b/g/n, Bluetooth and WiMAX technologies that we have built up for the past years. We will continue to develop other wireless telecom devices such as RF gain stages and femtocells.
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