More good news for Intel's StrongARM and Compaq's iPAQ Hand Held computer.
Taiwan company booms as Compaq's iPaq surges
By Faith Hung, EBN
Apr 26, 2001 (12:38 PM)
URL: ebnews.com
TAOYUAN, Taiwan-- Shortages of Compaq Computer Corp.'s iPaq pocket PC are forcing the computer maker to significantly increase its outsourcing efforts with Taiwan's High Tech Computer Corp.
Compaq will shell out $700 million to quadruple the number of units it will buy from HTC, the exclusive supplier of iPaq. HTC, which is 10% owned by Taiwan's Via Technologies Inc., will build two million units of the handheld device for Compaq this year.
Despite weakness in the U.S. economy, Houston, Texas-based Compaq is confident it can sell all of the personal digital assistants (PDA) that will be produced.
“We see no demand slowing in the product we sell,” Compaq's corporate procurement vice president Jack Baikie told reporters in Taipei.
The iPAQ, one of the first color-screen PDAs equipped with Microsoft Corp.'s Windows CE operating system, has enjoyed red-hot demand since its launch in 1999. Only 500,000 units were delivered to the market last year, leading to a big shortage.
Now, Compaq is using the production lines that HTC just opened to close the gap. “The iPAQ Pocket PC has created unprecedented demand and Compaq and HTC have been focused on increasing our mutual abilities to provide adequate supply to our customers,” Baikie said.
HTC's new plant is equipped to pump out a maximum of one million units per month and more than 10 million on a yearly basis, according to H. T. Cho, President of HTC, Taoyuan, Taiwan. In March, the company shipped a record 100,000 units of the handheld device.
Cho estimated the facility would have run rates ranging only between 80% and 90%, due to the scarcity of TFT-LCD panels, which are provided by Sony Corp. “The panel shortage should be worked out by around June or July, as Sony is increasing its output to the fullest extent,” he said.
Compaq's move to procure more iPaq units means increasing competition for Palm Inc., the largest PDA maker in the world. Palm's operating system competes with the Window CE platform of Microsoft.
“Market share [for the iPaq] is expected to grow at the expense of Palm,” said Ben Waldman, vice president of the mobile devices division at Microsoft.
Palm, Santa Clara, Calif, said recently that it would slash 10% to 15% of its workforce because of a slowdown in demand. Palm also told employees that it could lose market share as competitors introduce new products.
“Our customers have more choices in the handheld industry than ever before, which could result in lower market share in the future,” it said.
Palm is the market share leader in the PDA industry, accounting for nearly 61% of the U.S. market and 68% worldwide, according to a Bear, Stearns & Co. Inc. report.
Part of HTC's success lies in its timing to enter the market. The company was established in 1997, just as handheld devices were starting to get popular, some analysts said. “They got the timing right and have shown strong commitment to the business,” said Tony Tseng, an analyst at Merrill Lynch in Taipei.
Other wireless products that HTC will be focusing on include the new “Smartphone,” which runs on Microsoft's Stinger platform. The Taiwanese company will also make a new model of iPaq that builds in the high-speed GPRS technology. Initial shipment is scheduled in the third quarter, said HTC's Cho.
HTC, which has 1,200 employees, is Taiwan's largest PDA manufacturer. Last year, the island delivered 1.25 million PDAs, according to Taipei-based Market Intelligent Center. About 40% of that was contributed by HTC. |
