Business, Hardware

ASUS Wars: ASUSTeK vs. Pegatron continues


It looks like Dell got what they wanted when the company requested that ASUS splits its OEM and Retail business, when ASUS-branded products started to attack the markets that used to belong to the big three: IBM, HP and Dell. ASUS complied, separated the OEM business into PEGATRON business unit – initiating a war for power between two founders of the original company: Johnny Shih and Tung Tsu Hsien.

Seven months ago, Taiwanese magazine Business Today ran a story how the power struggle between ASUSTeK and Pegatron is tearing the company apart [PDF Download], detailing the sad story how Johnny Shih and his right hand Jerry Sheng managed to oust Tung Tsu Hsien to Pegatron. Given the fact that TweakTown has the English translation of this article, it might be a good idea to read it [clicking on the link opens a new tab or window anyways].

Once more, DigiTimes ran a story that heads of ASUSTeK Computer plan to sell the shares of Pegatron Technology to a third party, most likely to be Inventec. Previous rumors included Hon Hai Precision Industries [Foxconn], Flextronics or Inventec. In our view, this is another "test story" that will cause even more strain, since Tung Tsu Hsien still owns 30% of ASUS and doesn’t want to spun off from ASUSTeK.

According to the same story, Pegatron responded to this rumor and claimed that the company had no contacts with Inventec – or the same old story as in January/February of this year. In fact, it will be interesting to see how the negotiations would fare between Inventec and Pegatron. Last time around, ASUSTeK tried to sell the shares to Hon Hai/Foxconn, and one of condition was that Foxconn kills the Foxconn Channel, its retail brand known for overclocking motherboards. The negotiations went a long way and in the process, roadmaps were changed and a lot of people got the boot. Ultimately, Tung Tsu killed the negotiations and Foxconn Channel got to "live another day".

At the end of the day, all these power struggles brought a lot of doom and gloom to the company, who saw massive losses in market share and revenue across the board – since the managers are continuously changing our sources and we saw that is hard to make any sort of business deal with the company due to ping-pong effect.

In a way, it is sad to see the inventor of netbook markets being trumped not just by Acer [from which Johnny Shih eloped], but also by other players as well. Only time will tell how this tale develops, but one thing is certain – if ASUS stayed as one company, their retail business would be much stronger than it is today. The company listened to their western customers and ended up torn in multiple segments [remember GigaByte UNITED?].