Things to look forward to in 2012: Branding push for Taiwanese vendors?

P1020306 Things to look forward to in 2012: Branding push for Taiwanese vendors?

Most of PC hardware development, aside from core chips like CPU or memory, is done by Taiwan vendors, even though, for most of the time, they sacrificed most of the margin to their brand-wielding overseas customers. Can the infamous Taiwanese uber-thrift continue to manage the low-margin board business, or should they fight back with their own brands this year?

For time immemorial, Taiwanese vendors managed to pretty much control the PC OEM hardware scene, most of this being OEM hardware sales to a 'brand' holding vendor that would put together the final product. The problem with that approach was that lions's share of the total marking between the manufacture and the end user sale was going to that 'brand' and its channels, if any, rather than the Taiwan product manufacturer who put a comparatively greater effort, including capital expenditure.



So, the Taiwanese had to use a combination of their well known extreme thrift, which would sometimes make even the Scottish look positively generous, and long hard work combined with scouring for as many as possible customers to build up high volumes necessary to make any money. For instance, for most of the time, Asus, and before it Acer – which called itself Multitech some 20-odd years ago – had majority of their turnover from this OEM / ODM work for big overseas customers, rather than their own brand sales. That brand push started comparatively late, and – at least at the start – kind of shy, with concern that they don't offend the big customers by pushing their own brand, even though it's their own design through and through!



However, the accumulated effects of rollercoaster crisis-recovery-crisis times these past few years, and the sea change in market, where Asia-Pacific takes the lead now, are pushing for a change. It meant that, if you still want to have a semblance of stable business for medium to long term, and knowing that those big western or Japanese Tier 1 / 2 vendor customers can disappear overnight too, you, the Taiwan vendor, should control as much of the whole 'vertical stack' as possible – starting from control of your manufacturing facility somewhere in Dongguan or like, right up to the branded end user sales shops worldwide.



Remember that, as covered here the past few weeks, China has taken control of the whole vertical stack, including the microprocessor design and manufacturing, for the national benefit. However, that rubs of positively on its companies' branding effort too.



Talkin about China, another regional company example – Lenovo – which catapulted itself to a global branding success rapidly by taking over IBM PC division, a move considered literally crazy then, but proven wrong – has given an example that an Asian company outside Japan or Korea – from mainland China, at that – can become a global brand leader. After all, Lenovo bought IBM PC first for the ThinkPad brand, which paid itself over many times, plus the fact that the original PC brand was now in Chinese hands.



Acer, than Asus, took that plunge already. The other significant Taiwan name, Gigabyte, is in now as well, although, I feel,  their high end server team also has capability to churn out branded products rather than just do it for the others, as is the case now. A bit of extra support and marketing infrastructure is what it would take at this stage.



Then we talk about other critical component vendors – on the graphics card side, Palit Group's Gainward brand is a good example. For memories, among the enthusiasts, G.Skill and GEIL brought up well accepted brands for high end modules, just like A-DATA has its own branded memory products across the board. Thermaltake and Antec branding effort also paid off well in the casing, power and cooling departments, while Viewsonic displays are well known under the brand these days.



Of course, sales under own brand takes more effort, from marketing, to logistics across the markets present, to convincing the end users that it is your brand that they should choose for their purchase, and to direct fight in the market against what often were your previous 'branded' customers. In the second part of the story, we look at the efforts, and which Taiwan vendors have good chances at making it even more by the brand push at the world scene.

In the spare time over the past two decades, editor and writer of high-end computer hardware and design features and analysis for European and US media and analyst houses. Reviews of high end hardware are my specialty for 28 years already.