Thrill of the chase

Computer vendor Asus has the likes of Toshiba and Lenovo in its sights as it looks to capitalise on the popularity of its Eee PC family and climb into the upper echelons of the global PC market. Channel Middle East got the chance to talk with long-serving chairman, Jonney Shih, during his recent trip to the UAE and asked him all about the Middle East market, inventory challenges and those rumours that Asus could make a major acquisition to further its growth.

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Thrill of the chase
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By  Andrew Seymour Published  April 6, 2010 Channel Middle East Logo

Let’s start with the Middle East, seeing as you are over here to meet your local team among other things. Where does the Middle East fit into your global plans?

We believe the Middle East is now a very important part of our worldwide market, so our goal is to try to reach the number four position this year. And I think it is an important step for us to reach our so-called ‘three-three plan’, which we started last year when we said we would like to become a top-three notebook player by 2011. The Middle East is definitely an important growth area and I think we are now around number six there.

What about the other markets you cover? How are they bearing up given the challenges facing the industry?

Last year, according to IDC, we were still at number six globally, but number four, five and six are quite close, and actually in terms of EMEA we are already the number three. I think in Asia-Pacific, including China and Japan, we are now the number five, and in the US we are already number seven.

We were quite weak in the US before, but I think to become a top-three vendor [globally] the US is the last stronghold we have to overcome. We are lucky though because last year we grew almost 150% in the US to become the number seven, so overall I think we are doing fine.

We are on the right track to try to achieve the number three position by 2011. The Middle East is actually a very important portion [of the business]. I really hope that we can take advantage of Asus’ innovation and quality and through our [local] team’s effort see if we can get into the top three in the Middle East and Africa markets.

What is your view on the health of the PC industry? Is the market recovering as well as you would expect?

I think it does seem to be recovering and it looks like most of the players are optimistic about this year. Of course, I think we still have to be cautious, especially in Europe, where we have seen some economic situations that have not been promising, such as in Greece. So there is optimism, but you still need to be a little bit cautious and I think that is our current strategy.

In your foreword to Asus’ 2008 annual report you said, ‘crisis is always an opportunity for transformation’. What transformation has Asus gone through in the past year?

We have actually learned a lot [from the crisis]. The first is that we have a very strong innovation capability, but we now have to improve the innovation ‘hit rate’. If you look at our new product line-up I think we are now stronger and it can really drive a very good hit rate.

We have some pretty exciting products, such as the NX series, where we collaborated with David Lewis, the chief designer of Bang & Olufsen, which I think has raised a lot of attention and been important for creating the right image. The other area I think we have learned a lot about following the financial crisis is how to make the whole operation even leaner and drive the whole value stream from the development to the very end of the market.

What sort of actions has this led to?

We have operated very sophisticated supply chain planning and execution, including how to drive inventory and [optimise] other areas, such as the exchange rate. We now have better management in terms of the exchange rate so that we can hedge. That helps you to drive the operations more manageably with less fluctuation and less risk, so it is further continuation of our internal programmes.

We have been operating a ‘lean programme’ for quite a while now, but I think we learned even more lessons [from the financial crisis]. In the past one year, I have been quite proud of our team. I think they have learned a lot and also shown a lot of improvement in this area.

How satisfied are you with your ability to reduce stocks and strictly control inventory because that has been a major focus for the company during the past year?

We have a very tight control of our inventory even though we are very optimistic about the market this year. Because we want to get into the top four this year you can imagine the kind of volumes we must have to grow, but even with that I think we still have to be very cautious about the inventory control. However, I think our inventory control is now comparable to the industry-leading level.

How important is pricing to your strategy of winning market share? There is a perception that Asus is a very aggressive vendor when it comes to setting price points.

I think pricing is always a very important part, especially to define a new type of product or with respect to market share. It is also important in terms of customer expectation so we are very focused on how to set the price. But we don’t to do low pricing because we think it is more important to have the right pricing. That is our concept. The right pricing, together with innovation, product performance and also quality and reliability, is the best strategy.

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