ASUS Slashes PC Cost 80% Selling 2 per sec! End of US Dominance?

Computer story of 2007: Asus selling Eee PC at 2 per sec, $299. Bad sign for US industry.

1. Photo of Asus Eee has interface like no other.

First of all, this isn’t really bad news, as the US juggernaut needs to be slowed down. Don’t believe the Eee is big? Watch for it on Google News. You’ve heard similar things before, but this really is N-E-W-S. The $299 "Model T Ford" of computing has arrived — Asus Eee — and its Taiwan intro saw sales of 2 per second! $299 (headed for $50?) computers — good for you, zero profit for HP, Dell, Microsoft. [SOME PHOTOS AT END OF ARTICLE.]

The point isn’t to bash China or promote the Eee per se. The Eee is merely the start of affordable computers; and better, cheaper ones will come along. Can you see how this is desirable — to oppose US electronics domination? Electronics is a key to US-based globalization (read "economic colonization") and Bush’s Shock and Awe weapons. Also, it’s high time we get rid of our condescending attitude toward developing nations, the "We think (design and market products), they sweat (literally, in sweatshops)" idea.

The Eee will become a collector’s item — like the Model T Ford, which "put the world on wheels." The hype and buzz are justified. It’s big for computers the way the Ford Mustang was the biggest new car intro ever. SEE THE PHOTOS, WHICH MAY BE AT THE END IN SOME VERSIONS OF THIS ARTICLE.

http://eeepc.asus.com/en/news101812007.htm

The Linux version will reach the U.S. in about 2 weeks. Best Buy will soon be selling it, online — but it’s too R-E-V-O-L-U-T-I-O-N-A-R-Y to put in their stores. There’s too little profit in it for Best Buy — or for Microsoft, HP, or Dell. Microsoft will practically give its XP system to Asus to get on board by the end of the year — but where’s the profit in a $30 XP copy, and what happens to Vista? Meanwhile, the Linux Eee offers a whole new computing experience.

[Microsoft will sell XP licenses to Asus for $1000 (Taiwanese dollars), or $30.65 in US dollars. Note I am not talking about the admirable One Laptop Per Child project. The Asus is for you and me — at least me.]

2. PHOTO OF JAPANESE ZERO FIGHTER

Electronic dominance has military implications. The Shock and Awe shown in the US attack on Iraq depended on precision-guided bombs and missiles. Military and economic hegemony depend on electronics leadership, control of the most advanced chip designs and manufacturing processes. The Chinese know this.

Am I being a Chicken Little ("The sky is falling!"), anti-American, or anti-China? No, I am merely predicting a Taiwanese/Chinese impact on the US IT industry similar to the impact of the Japanese on US electronics in the 1960s. That’s when Asians drove the US out of consumer electronics. This time around, strong competition might not be a bad thing for the world, or the US.

See the photo of the Eee? Think you won’t be impressed when you see one or try to use one? The Easy ... Easy ... Easy ... (Eee) interface is not exactly Linux and it’s sure not Windows. "You ain’t seen nothing yet!" There’s a 1-click Easy interface, swichable to a regular desktop. Nothing like it. http://www.hothardware.com/articles/Hands_on_with_the_ASUS_Eee/?page=2

The Asus EEE is Instant-On (as TVs became 40 years ago!) because it uses a flash drive instead of a disk drive and because it uses a reasonable OS, not Microsoft: The system boots in 15 sec.

If Best Buy is too chicken or self-serving, who should sell these? Starbucks, for one. It is the ideal coffee house computer. Rugged (no old-fashioned disk), disposable (today $250, tomorrow much less), and ultracompact: a pocket PC. You could see a $50 knockoff in Walgreen’s or even dollar stores, in a few years. I just bought a $2 scientific calculator with all of the functionality of an HP-35 that had cost $400 in 1972. From 1972 to 1976, four-function calculator (the old +, -, x, / kind) prices fell 95 percent - plummeting from an average of $195 to just $9.95. Falling prices unseated a number of calculator brands. Hear that, Dell, HP, Sony?

Already the "Curtis" and "Coby" brands are planning less-than-$100 ultraportables for sale in closeout/discount stores. Even Asus will be hard-pressed to compete.

THE KEY TO MINIATURIZATION — "IT’S THE SYSTEM, STUPID" (not the components)

3. PHOTO COMPARISON OF ASUS Eee AND OLD-FASHIONED LAPTOP

This is something the Asians always understood explicitly: Less is more, smaller is better. Let Intel spend billions driving down the size of transistors on CPUs, we’ll MAKE billions selling small computers — that’s what the Asians are saying.

Also, they say, no more of this "We sweat, they think" stuff: Let’s make our own brands. Chances are you already have an Asus-made computer if its a Mac or Sony. More likely they made your motherboard, as they are largest maker of these.

THE IMPORTANT THING IS TO MAKE THE "END PRODUCT" SMALL (the system, computer, radio, or whatever), NOT JUST THE PARTS INSIDE THE CASE. The heck with Moore’s Law: Shrini the case and cram the parts in!

A SMALL PRODUCT SIZE GIVES YOU —

— - A low price. Materials cost money. Shipping big laptops from the other side of the world costs money.

— - Ease of use. Present laptops are modeled on Thomas Jefferson’s (yes, that Thomas Jefferson) laptop desk, which he designed in 1775. It was the same size as laptop computers and had a folding lid, but inside were pens and papers. Laptops are a little out of date and not very portable. The Asus Eee is easy to carry, even in a (coat) pocket.

In the early 1970s, Bill Hewett ordered his engineers to shrink down HP’s first electronic desktop calculator - the 40-pound HP 9100A — to make a S-C-E (small, cheap, easy) one, and they came up with the 1.8 pound HP-35. This, 1.8 pounds, is about the weight of the Asus Eee. A "modern" Dell XPS M2010 laptop is more like the old, old HP calculator, or Jefferson’s wooden "laptop," about 20 pounds. This is not the future, folks.

A SMALL, CHEAP COMPUTER HAS TO BE EASY TO USE. This is a low-low-price computer for the masses, same group the Model T Ford was aimed at. It has to be easy to use, because it has to be simple (easy to produce), being so cheap. And, remember, the automobile market wasn’t for everybody until Kettering’s self-starter made cars easy to use.

4. PHOTO OF WORLD’S FIRST TRANSISTOR SET, AMERICAN (1954)

5. PHOTO OF SONY TR-63 THAT STOLE THE SHOW, JAPANESE (1957)

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The Sony TR-63 (SEE PHOTO) hit the US market like a tsunami in late 1957. Here’s what happened next.

The Japanese sold, in the USA,

1957: 100,000 transistor radios (Eee plans call for 300,000-500,000 in 2007.)

1959: 6 million transistor radios (Similar to Eee number planned for 2008.)

1960: 54% of US market

1965: 67%

1969: 94% — US companies were driven out of their home market.

S-C-E: THAT’S WHAT WON AND WHAT WINS

The US invented the transistor (AT&T, 1947). Americans also invented the transistor radio, Regency TR-1 (SEE PHOTO), in 1954. The Japanese showed how to use it: MINIATURIZATION — but of the product, the case — not just the components. (Sony did design a spectacularly innovative and small tuning capacitor.) Most American companies lagged in shrinking the radio case itself until it was too late. Like today’s PC makers, they felt that a truly small set would have too low performance. However, it turned out that people could do without high performance/high-fidelity in many situations.

The Japanese couldn’t get into the conventional sales channels at first (the Best Buy stores of the day), so they sold in novelty stores (like Ma and Pa dollar stores of today), jewelry stores, drug stores (like Walgreen’s), department stores, discount stores, hardware stores. They sold over 75 different brand names — all not well known and some quite silly.

Can you see the day when you will buy a computer like the Asus Eee for $50 at Walgreen’s under the "Playmate" or "Amico" brand name? Don’t laugh: No-name brands drove Zenith and RCA, the old US mainstays, out of the radio and TV markets (or out of their own country, i.e., USA).

Americans introduced the color TV in 1954 (RCA).

Americans invented the transistor portable TV (Philco, 1959).

Americans introduced video tape recording (1968, Cartrivision). Sony countered with Betamax in 1972, but JVC (Japanese Victor Company) won with the VHS recorder introduced in 1976 BECAUSE IT WAS SMALLER AND SIMPLER MECHANICALLY. Do you see the market advantage of the small, simple Asus Eee now?

All of these markets were later lost to Asian manufacturers by 1990. They beat us on miniaturization and price. We insisted on high performance and high price.

Same thing with computers: S-C-E (Small-Cheap-Easy) is unstoppable. I have tried to show you how it will play out for computers. Get a handle on the future; get your hands on an Asus Eee.

6. DOLLAR STORE GRAPHIC — WHERE COMPUTERS ARE HEADED

A US COMEBACK IN ELECTRONICS

The US has made a comeback in electronics in the digital era — especially since the 1981 introduction of the original IBM PC (model 5150).

In the 1990s digital products marketed by US brands largely compensated, in dollar volume, for the above lost markets in consumer electronics products. US brands (esp., Intel) controlled the microprocessor market. They controlled the market for computers, which became consumer products themselves. And US brands controlled the markets for many of the consumer products spawned by microprocessors and PCs.

However, the Asus Eee demonstrates that the Chinese companies that are manufacturing for the US brands are turning on the Americans as the Japanese did 40 years ago. They will prove invincible as they market their own PCs to compete with HP and Dell, and their processors to compete with Intel and AMD. Already, Taiwan-based companies like Asustek make almost all computers, of whatever make, in mainland China factories.

The Chinese will have no use for Microsoft, and later none for Intel, as computers get much cheaper than even the Asus Eee. How low can mini comuters go? Based on the history just given and the actual COST OF PARTS, I would say $50, possibly much less. — Clayton Hallmark