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News :: Globalization : Technology
ASUS Slashes PC Cost 80% Selling 2 per sec! To Kill US Computer Industry?
31 Oct 2007
On Halloween, a company started selling a revolutionary PC for a revolutionary price -- the Asus Eee. 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 is coming. The Eee's 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.]
Computer story of 2007: Asus selling Eee PC at 2 per sec, $299. Bad sign for US industry.



1. $299 Asus Eee has interface like no other.
2. Japanese Zero carrier-based fighter.
3. Asus Eee vs. old-fashioned laptop.
4. The US Regency was first, but lost.
5. The Japanese "Invasion": Sony TR-63.
6. Cheap PCs will be sold in unconventional outlets.

More on NewEgg .

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 to demolish the condescending attitude of US globalists toward developing nations, the "We think (design and marketing products), they sweat (make them for us)" mentality.

The Eee will become a collector's item (presales are offered on Ebay for outrageous prices) as the Model T Ford, which "put the world on wheels," did. The hype and buzz are justified. The Eee is 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.

The Linux version is here (online). Even 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 operating 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. Note:, a large online retailer of PCs, started offering it on Halloween.

[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.]



Click on image for a larger version


Electronics 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 get to try one? The Easy ... Easy ... Easy ... (to learn, work, play) interface is not exactly Linux and it's sure not Windows. "You ain't seen nothing yet!" The one-click Easy interface is swichable to a regular desktop. Nothing like it.

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 sensible OS, not Microsoft: The system boots in 15 seconds.

If Best Buy is too chicken or self-serving, who should sell these? Starbucks, for one. The Eee is the ideal coffee house computer. Rugged (no old-fashioned disk), disposable (today $299, 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 new $2 scientific calculator with all of the functionality of an HP-35 that cost $400 in 1972. In the same era, from 1972 to 1976 prices for ordinary four-function calculators ( +, -, x, / ) 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? Collapsing prices are a real possibility for *computers* as well.

Today, the "Curtis" and "Coby" brands of electronics sold in discount stores are planning less-than-$100 ultraportable notebooks. Even Asus will be hard-pressed to compete.

THE KEY TO MINIATURIZATION -- "IT'S THE SYSTEM, STUPID," not chip density (Moore's Law)



Here 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 Asus 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: Shrink the case and cram the parts in! (By the way, Moore's Law has stayed at 1.72 billion transistors, maximum, on a CPU chip since 2006. Intel is cutting back on development of more complex chips because the effort is not worth the expense.)


--- 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 ultraminiature PC is easy to carry, even in a (coat) pocket.

In the early 1970s, Bill Hewlett 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) scientific calculator, 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 weights in 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. The Eee 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.





The Sony TR-63 (PHOTO) hit the US electronics 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 Eee PCs in 2007.)

1959: 6 million transistor radios (Similar to Eee PC sales plan for 2008.)

1960: 54% of US market (Will Chinese brands get half of US PC sales by 2010?)

1965: 67%

1969: 94% -- US companies were driven out of their home market. (How long will this take for PCs?)


The US invented the transistor (AT&T, 1947). 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.) Though the little-known Regency made the first transistor radio (PHOTO) and made it pocket size, 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 real toys are today's unnecessarily "high-horspower" computers for "grown up boys." Even the OLPC is less a toy. For most people, a computer will always be a tool, not a toy.

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 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 the old US mainstays like Zenith and RCA out of the radio and TV markets (or out of their own country, in the case of RCA).

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 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. To get a handle on the future, get your hands on an Asus Eee.




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 thrived in the markets for many of the consumer products enabled or enhanced by microprocessors and PCs (software, games, Internet services, home appliances, communications, and so on).

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 own processors to compete with Intel and AMD. Already, Taiwan-based companies like Asustek make almost all computers, of whatever brand, 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 pocket computers go? Based on the history just given and the actual COST OF PARTS, I would say $50, probably much less. -- Clayton Hallmark

This work is in the public domain
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