CEO Forum - Q3/2003

1. Ultimately, do you feel that your company's future hinges on diversifying into other markets outside of motherboards, such as wireless, IA, storage, video, etc…?

CEO #1: We will diversify our product line based on its core competence: motherboard design and manufacturing.

CEO #2: Our core business now is motherboards and graphic cards…

CEO #3: Our company has been investing in ACP (Applied Computing Platform) business for years, products including touch panel PC, PC system, server system, NAS, ACP board, Media Center…and so on. We can see the rapid growth constantly. For the other product lines, we always keep on researching and will implement new programs in the near future.

CEO #4: …we will still invest resources on our core competence of motherboard business. This is the basic of new business.

CEO #5: Our core competency is motherboards. We have vertically integrated to include control over all production and have relocated to China for cost benefits. Demand for motherboards in our clone market remains strong. As the market matures, we will further strengthen our hold on this segment as the strong get stronger and the weak look to survive. We will experience growth through this strengthening and also through emerging markets. However, a maturing market also means our company has to look elsewhere for growth opportunities. You could say that our future will use motherboards/VGA as the base and new products such as miniPC as a means of accelerating growth.

As the motherboard market has started to reach its full maturity, it wasn't unexpected to see all of the CEOs answering, "Yes," in one manner or another. One CEO answered no, but did acknowledge that motherboards were an avenue for future proliferation into other markets.

The most notable diversification in recent news has been the large success of Shuttle at the Small Form Factor. They may have perhaps struggled at motherboard sales, but the advent of the XPC has given add security to Shuttle's place in the market. Profit margins are getting thinner, and new sources of revenue must be sought out. It seems inevitable that diversification will occur for all motherboard manufacturers, but when will be key to the success of any innovation. Pointing back to SFF, Shuttle's first dive into this market has given them a distinct advantage. Recent attempts by several other major manufacturers have yielded some success in niche markets, but Shuttle still takes the majority of this market. Timing can turn out to be a company's biggest ally or foe.

We followed up by asking, "Where do you see the emerging markets?" The responses we got back were fairly expected, as SFF and wireless were the most mentioned.

CEO #1: Server/Storage, Wireless, Notebook.

CEO #2: Wireless, IA, Video.

CEO #3: Barebone Desktop, Barebone (Channel) Notebook, Special purpose XC, Consumer PC.

CEO #4: We think "wireless" has the most potential Enterprise will need it, and then family users will follow.

CEO #5: We see great opportunity especially in barebone system and wireless LAN. The PC market will break into 2 fringes: the high-end product for gamers or people pursuing performance and the small-sized with multi-function that for common or office user. MiniPC satisfied the second group, and the market is booming. Wireless LAN is another killer application for the PC market. The market is surging rapidly, and when Intel is really to integrate it to their motherboard chip, it will become the standard specification eventually.

CEO #6: Bare bone (white box) servers; security servers with built-in encryption devices; optimized server platform for the HPC market, e.g. built-in infinite band controllers; storage products using iSCSI protocol.

CEO #7: DTP, Barebone systems, N/B, Servers, Graphic Cards, Optical storage, Wireless LAN & WAN Devices, and Network switches.

CEO #8: There is always a market demand which request high quality service. We will focus on new product innovation and exact production management to catch the eyes of the worldwide IT industry.