The Most Hated Company In the PC Industry

January 4, 2008
By Mike Elgan

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And why does Intel love them?

Taiwan's Asustek -- better known as ASUS -- is one of the most interesting, innovative and fastest-growing companies in technology.

At its core, Asustek makes motherboards -- more than any other company. Asustek motherboards are the heart of Sony's PlayStation 2 consoles, Apple MacBooks, Alienware PCs, and some HP computers.

But that's not why they're hated. The source of ire is a tiny laptop called the ASUS Eee PC. This open, flexible, relatively powerful, and very small laptop is notable for one feature above all: Its price. The Eee PC can be had for as little as $299. (Go here to read the reviews -- they're all positive.)

Let's take a moment to ponder how cheap that is. This full-featured laptop costs $69 less than the 16 GB Apple iPod Touch. It's $100 less than an Amazon Kindle e-book reader. The most expensive configuration for the ASUS Eee PC on Amazon.com is $499.

Even though ASUS isn't a well-known consumer brand, and even though the company just started selling them in late 2007, the company expects to sell up to a half million units by March, and up to 5 million by 2009.

The reason Microsoft hates Asustek couldn't be more obvious. The Eee PC runs Linux (Xandros running KDE) and uses an appealing and innovative tabbed-based user interface developed by Asustek. The device also comes with OpenOffice, a Microsoft Office replacement, and Firefox. The entire system -- hardware, OS, office suite and applications -- costs $30 less than Amazon.com's discounted price for Microsoft Windows Vista Ultimate alone. The Asus Eee PC is demonstrating to the world that its success depends on aggressively *avoiding* any Microsoft product.

Apple and Dell hate Asustek because these companies have been planning for quite a while to introduce flash storage-based mini laptops. But by the time they get around to shipping, the ASUS Eee PC will have already gobbled up some of the market. Worse, the ASUS Eee PC is preemptively poisoning the well by applying enormous price pressure on these two companies.

In truth, Apple isn't all that concerned because they'll do what they do, and the masses will respond. But poor Dell. That company's flash-based mini-laptop will probably cost five times as much as the ASUS. It will be 10% better and 500% more expensive than the ASUS Eee PC. Good luck with that, Dell!

Palm, Inc. hates Asustek because the company has made a fool out of them. Palm announced in May its Foleo mini-laptop. The device was slightly bigger than the ASUS Eee PC, but less capable and twice the price. The Foleo focused on connecting to the Internet through Palm's own line of giant cell phones. While many think Palm "killed" the Foleo, they in fact only killed the idea of shipping with a Linux-based OS.

In his blog announcement, Palm's CEO vowed to come back with a Foleo-like device that runs the same proprietary OS that powers Palm's next-generation of cell phones. By the time Palm gets around to shipping something, the market will be saturated with millions of ASUS Eee PCs on the low end, and thousands of Apple and Dell units on the high end.

Meanwhile, Intel loves Asustek. The ASUS Eee PC is powered by -- you guessed it! -- an Intel processor, namely the 900 MHz Intel Celeron-M. More than that, Intel respects Asustek for its engineering prowess. Intel discovered this fact when the company was struggling in the 1990s to fix a range of design flaws in its own 486 motherboard prototypes. Asustek was able to fix it, and in fact already had a fully operational motherboard for the chipset before Intel did. Since then, the companies have been very close.

Now rumors are circulating that a new Intel Merom-based ASUS Eee PC that may ship as early as April will run so efficiently that it won't need a fan. The entire laptop will be solid state -- no moving parts. Intel loves that kind of thing.

There's no question about it -- Asustek is the most hated company in the industry. Microsoft, Apple, Dell and Palm hate Asustek because the company can give us something they can't: A super cheap, flexible, powerful mobile computer. At $299, why would anyone not buy one?