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Netbook Pioneer Asustek Enters the iPad Age Asustek is introducing tablets in response for the Apple blockbuster but nonetheless sees a long term for netbooks. So far, investors are not convinced
By
Bruce Einhorn and
Tim Culpan

(Corrects the spelling of Asustek inside the headline)
Tiny computers have already been excellent to Asustek. The Taiwanese organization in 2007 released the primary netbook, people low-priced mini-laptops which have been the Computer industry's fastest-growing merchandise for that past two many years. Netbooks now symbolize practically 40 percent in the Asus brand's sales and have been the main aspect in aiding Asustek tie Lenovo because the world's No. five moveable Personal computer firm, in accordance to researcher Worldwide Info Corp.
Now it appears such as the netbook expansion engine is dropping steam. Netbooks' reveal with the global Personal computer marketplace will most likely be flat this year at twelve %, IDC estimates. Rather, shoppers are flocking to tablets for example Apple's (AAPL) iPad, which offer a lot of the benefits of netbooks. For Asustek, meaning generating a big push into tablets whilst wanting to convince corporations and consumers that there are even now advantages to netbooks.
On May possibly 31, Asustek unveiled its very first weapons in the battle against the iPad: the Eee Pad and also the Eee Tablet. Like Apple's unit, the Eee Pad—available next winter—will have a touchscreen, an embedded keyboard, and videoconferencing capability. Unlike the iPad, the Asus machine will sport an Intel (INTC) processor and use the Windows 7 operating system. The Eee Tablet, to hit the industry 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 revenue and earnings progress within the coming many 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 from the works, though some have delayed launches within the wake of the iPad. Even though the new Asus machines will hit stores before most in the competition, traders clearly have doubts about Asustek's strategy. Its Taipei-listed shares dropped 18 % this 12 months through May well 17,Windows 7 Home Basic, when stock income were suspended pending the upcoming spinoff from the company's manufacturing arm. One investor worry is that Asustek can't provide as numerous apps as Apple can. "They have a very excellent product but the environment is not ready; there's nevertheless 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 nonetheless can tap a vast corporate industry for netbooks. The company 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 nevertheless provide a better user experience" than tablets, says Shen.
To hedge against a big decline in netbook popularity, Asustek is heading upscale. In May the firm 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 even now 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,Win 7 Ultimate Key, Shih is a supporter of 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,Genuine Windows 7 Pro, to help test e-readers. Cheng Yen "is the best quality assurance,Genuine Office 2010 X64," 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, little netbooks, begin to flatten.

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