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Taiwanese Notebook Makers Shift Focus to Software Development Amid Competition

Strategic Insights

— 1 min read

Taiwanese notebook computer makers, including Compal Electronics, Wistron Corp., and Quanta Computer, are shifting their focus to software development in an effort to provide value-added applications and reverse the disadvantage of squeezed gross margins amidst fierce competition in hardware manufacturing. Following the successful launch of Apple's iPhone and iPad, which have been accompanied by a wide range of self-developed applications, these companies have become increasingly aware of the value of software. As price competition is no longer a viable strategy for securing orders and making money, finding ways to upgrade their products through software development is critical to future growth.

Key Takeaways:

  • Compal Electronics has a team of over 500 engineers specializing in software development, with plans to invest further in its software division.
  • Wistron Corp. has added almost 1,000 new software engineers to its payroll in recent years, while having over 3,000 employees in software development.
  • Quanta Computer has hired about 800 software engineers and is planning to seek partners to set up strategic alliances or joint ventures to expand its software strength.
  • The shift in focus towards software development is driven by the realization that software can provide a competitive edge and help to reverse the disadvantage of squeezed gross margins.
  • The companies mentioned are not putting all their eggs in one basket, instead focusing on diversifying their business through software development.
  • The successful launch of Apple's iPhone and iPad has had a significant impact on the industry, prompting Taiwanese notebook makers to re-evaluate their business strategies.

Statistics:

  • Compal Electronics' gross margin fell to 4.9% in the first quarter of the year, down from 5.4% in the previous quarter.
  • Wistron Corp. has over 3,000 employees in software development.
  • Quanta Computer has hired about 800 software engineers.
  • The industry is noticing a shift in focus from hardware production to software development, driven by changing market dynamics.

Sources:

  • Asia Pulse
  • Compal Electronics Inc. (TAIEX:2324)
  • Wistron Corp. (TAIEX:3231)
  • Quanta Computer Inc. (TAIEX:2382)
  • CNA

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