Win 7 Professional Netbook Pioneer Asustek Enters

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Netbook Pioneer Asustek Enters the iPad Age Asustek is introducing tablets in response on the Apple blockbuster but even now sees a potential for netbooks. So far, traders are not convinced
By
Bruce Einhorn and
Tim Culpan

(Corrects the spelling of Asustek within the headline)
Small computers have been very good to Asustek. The Taiwanese business in 2007 introduced the very first netbook,Office Professional Plus, individuals low-priced mini-laptops which have been the Personal computer industry's fastest-growing product for your past two decades. Netbooks now represent virtually forty percent with the Asus brand's income and have been the primary factor in aiding Asustek tie Lenovo as the world's No. 5 transportable Personal computer business, in accordance to researcher Global Info Corp.
Now it seems to be just like the netbook growth engine is losing steam. Netbooks' reveal in the international Pc marketplace will almost certainly be flat this year at twelve percent, IDC estimates. As a substitute, consumers are flocking to tablets for example Apple's (AAPL) iPad,Microsoft Office 2007 Enterprise Product Key, which provide a lot of the advantages of netbooks. For Asustek, that means generating an enormous push into tablets while looking to persuade companies and customers that you will find still strengths to netbooks.
On May 31, Asustek unveiled its initial weapons inside the battle towards the iPad: the Eee Pad along with the Eee Tablet. Like Apple's system, the Eee Pad—available next winter—will have a touchscreen, an embedded keyboard, and videoconferencing capability. Unlike the iPad,Windows 7 Professional 64, the Asus machine will sport an Intel (INTC) processor and use the Windows 7 operating system. The Eee Tablet,Buy Office Home And Student 2010, to hit the market in early 2011, is an electronic book reader with a touchscreen and built-in camera that allows users to write notes on photos. The new gadgets could be "key drivers for Asustek's income and earnings expansion in the coming years," KGI Securities analyst Angela Hsiang wrote in a June 1 report.
Asustek will have plenty of competition, even aside from the iPad. Dell (DELL) has launched a mini-tablet called the Streak, and almost every other Computer maker has a tablet in the works, though some have delayed launches from the wake from the iPad. Although the new Asus machines will hit stores before most of the competition, investors clearly have doubts about Asustek's strategy. Its Taipei-listed shares dropped 18 percent this year through May possibly 17,Win 7 Professional, when stock product sales were suspended pending the upcoming spinoff in the company's manufacturing arm. One investor worry is that Asustek can't supply as numerous apps as Apple can. "They have a very good products but the environment is not ready; there's still not enough content," says Robert Cheng, an analyst in Taipei with Credit Suisse (CS). Another problem is that the Eee Pad will have about six hours of battery life, four hours less than the iPad.
Asustek CEO Jerry Shen believes he even now can tap a vast corporate industry for netbooks. The firm is tinkering with design, moving away from the current clamshell look to sleeker one-piece models—a kind of tablet shape but with a physical keyboard. Asustek "will have a lot of different types of netbooks that can still provide a better user experience" than tablets, says Shen.
To hedge towards a big decline in netbook popularity, Asustek is heading upscale. In May the organization launched notebooks with Bang & Olufsen sound systems and launched a line of laptops with bamboo on the lid, using 20 % less plastic than other machines. "We nevertheless have a lot of innovation going on," Chairman Jonney Shih says, showing off the private lab adjacent to his office where he retreats to clear his mind by tinkering with Asus gadgets.
One of Asustek's most offbeat innovations is its product-testing strategy. A Buddhist vegetarian, Shih is a supporter in the Tzu Chi Foundation, one of Taiwan's biggest Buddhist charities. He enlisted Venerable Dharma Master Cheng Yen, the foundation's 73-year-old founder, to help test e-readers. Cheng Yen "is the best quality assurance," Shih says. "She is so patient." As Asustek tries to match the iPad, he'll need patience from customers, too.
The bottom line: Asustek is working on new tablets as product sales of its mainstay machines, very small netbooks, begin to flatten.

Einhorn is Asia regional editor in Bloomberg Businessweek's Hong Kong bureau.
Culpan is a reporter for Bloomberg News
.