Samsung, White Boxes Constrict Taiwan Tablet Brands

This is the Surface Studio

Acer is pumping out new tablet announcements and a market research report calls cross-town rival Asustek the world’s No. 4 brand of the tiny, touch-screen computers. The two flagship Taiwanese PC developers suddenly look like serious contenders in the world’s still growing tablet PC market. But both will eventually get filed away to a lonely middle-ground position as Samsung grabs high-end consumers and white box brands outcompete on price.

Asustek should rank as the fourth biggest tablet producer in the first half of the year at 6.5% of global market share, Taipei-based DigiTimes Research says in a report on Monday, up from 2.6% in January through June of 2013. Half its first-quarter share this year came from sales of the Transformer Book T100 model tablet, which runs on Windows 8.1 and includes a seldom found detachable keyboard, research firm analyst Jim Hsiao says. Acer is looking at a first-half market share of just 1.7% but has caught attention for holding prices down, for example $207 for its phone-equipped Iconia Tab 7 that was announced on Wednesday. The same day it said a 2-in-1 notebook-tablet tool is on the way for $380. Tablet sales across brands will rise 19.4% this year to 260.9 million units, according to US market research firm IDC.

Yet by year’s end the Taiwanese brands will be boxed in. Samsung will overshadow them with its more numerous choices, user-friendly software and a dedication to high-end consumers. Consumers already see Samsung tablets as credible iPad alternatives. The Korean brand’s tablet market share should rise this year from 16.9% to 21.4%, the Taiwan government-backed Market Intelligence and Consulting Institute says. DigiTimes Research tips its first-half share to extend from 15.3% last year to 24.8% this year.

Another competitor, Lenovo, will cramp its Taiwanese peers by building on historic name recognition in China, the world’s biggest buyer of mobile devices as of last year.

White box brands threaten Taiwan’s contenders from the low end. They’re often made in China where the whole supply chain, from panels to batteries, runs up less of a bill than in Taiwan. Some white boxers even buy used parts, says Joen Yang, an analyst with the government-supported institute. Better known tablet brands have already overlooked Taiwan for China for contract assembly work. The combined market share of these obscure brands will grow from 36.9% in the first half of 2013 to 43.7% in the same period this year, DigiTimes Research says. The Market Intelligence and Consulting Institute expects white box brands to see last year’s 29.3% share rise to 30.8% in 2014.

“The seven-inch tablet market was already mature in 2013, so Lenovo and the white box brands will move in now,” says Hsiao, calling both a threat to Asustek in particular. (See Asustek’s mobile device story here.) Analysts take already ailing Acer less seriously over the tablet long term for lack of strong in-house R&D.

Acer and Asustek will keep launching tablets but look to conventional PCs for revenue. “Taiwan’s tablet brands will get stuck in an embarrassing middle position.” Yang says.

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