Nov. 25, 2002

Hewlett Packard’s Taiwan subsidary told the local press that it would release its tablet PC orders to Taiwan PC makers on anOEM basis. HP expects its tablet PC sales will represent 10% of its notebook PC revenue in 2003.

HP is now negotiating with companies like First International Computer Ltd., Inventec Corp., and Compal Electronic Co. for the OEM production. HP has mainly contracted tablet PCs to LG of South Korea so far.

HP debuted its newly developed HP Compaq Tablet PC TC1000 in Taiwan this month, obviously as a challenge to TravelMate C100, introduced by Acer Inc., the leading PC maker in Taiwan.

Chuan Cheng-sung, president of HP's personal system department in Taiwan, said that die PC Industry would reach its trough by the first quarter, and that it would resume a double-digit growth rate beginning in 2003.This, together with the introduction of tablet PCs, will stimultate sales of of PCs in the market.

Insider's opinions divided over market penetration

In related news, over half of the world's Tablet PC brands are now leading personal computer suppliers in Taiwan, with more local firms poised to enter the field as Microsoft's
Windows XP operating system made its debut in Taipei last week.

Chiou Li-meng, president of Microsoft Taiwan, said there are presently 21 companies in the world manufacturing Tablet PCs and that 13 of them, or 60% of the total number, are based in Taiwan. They include traditional OEM partners like Acer, Aopen, First Computer International, Tatung, Twinhead International, and ViewSonic.

There are also ODM partners like Compal Electronics, Giga-Byte, Microstar and VIA Technologies.

As a damper to exaggerated expectations, Gartner Dataquest on November 6 analyzed that despite much publicity and market promotion, the Tablet PC is not expected to result in a high rate of early adaption. Dataquest expects that Tablet PC shipments would reach 425,000 units, representing 1,2% of the worldwide notebook shipments in 2003-

Ken Dulaney, vice president and research area director for Gartner told reporters: "Tablet PCs will have a natural fit in many vertical operations that currently use pen-based tablets, however, a lack of application support, clumsy hardware designs and a price premium will be barriers for most users. "

The majority of early purchases are expected to be made by businesses, especially within vertical industries, buying in lots of one to ten pieces for evaluation purposes. Consumers and business executives looking for the latest new gadget on the market will also make up a majority of early shipments.

"(This) initial interest could cause an early spike in purchasing that will eventually level out", said Leslie Fiering, vice president of Gartner Dataquest. "Outside the vertical industries, only the bravest will implement Tablet PCs widely toward the end of 2003".

Gartner Dataquest expects a six- to nine-month evaluation period before any volume production are made, even within vertical industries.

More than 20 PC hardware vendors will be releasing new Tablet PCs within the next year. These models include ink as a new data type and capture handwriting or drawings via pen input.

Despite the slow start, Tablet PC adoption is expected to ramp up. so that by 2007 at least 35% of all notebooks sold will have screen digitizers with a convertible or separable keyboard design.