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THE EARLY DEATH of Steve Jobs, co-founder and CEO of Apple Inc, sent reverberations not just through its ardent Apple fan base in Taiwan but also through the island’s IT manufacturing sector. Over the last decade, Apple has built up an extensive supply chain in the ITcentric nation, outsourcing most of the manufacturing of its iconic PCs, iPods, iPhones and iPads to Taiwanese companies.
Stan Shih, founder of local PC company Acer Inc and a respected industry veteran, paid tribute to Jobs by noting that under Jobs’ leadership, Apple created new business opportunities for Taiwan’s IT industry. From components such as chips, camera lenses, battery packs and touch screens, to the assembly of Apple devices, Taiwanese companies have found fortune riding the rising tide of demand for the unique brand of designer gadgets.
Now, however, a different kind of wave is hitting Taiwan’s IT players. This is the upheaval in the mobile computing market — tablet PCs and notebook PCs — that is being caused by Apple’s hugely popular devices. Its iPad tablets and MacBook Air ultra-light laptops are so popular, they have outsold their competitors this year.
According to estimates from Digitimes Research, a leading Taiwanese IT research and news company, Apple would have shipped 52.7 million units of tablets and laptops between January and October. That is way ahead of Hewlett-Packard’s 37.2 million units, Lenovo’s 28.8 million units, Acer’s 27.7 million units and Dell Inc’s 24.6 million units.
CANNIBALISATION
Even more significant is the fact that the iPad is not just leaving its tablet competitors in the dust, it is also eating into laptop demand. This is happening as the economic picture for many key economies has turned gloomy. According to Digitimes Research, that suggests global shipments of laptops could actually contract by 0.3% this year, from 2010. This forecast is bleaker than what other industry watchers are predicting, as the consensus view is that global notebook shipments will continue to grow this year. International Data Corp, for example, is looking at 4.9% y-o-y growth for notebooks in 2011.
If the softening demand for notebooks extends into the seasonally strong year-end buying season, it will spell pressure for Taiwan’s PC vendors.
For one thing, it will put home-grown brands such as Acer and Asustek Inc on the back foot, as they are exposed to the lowmargin segment of the PC and laptop market. This is particularly so with netbooks, which were once popular for their affordability but are today being eclipsed by tablets.
