Windows of opportunity
A strong early buzz is building for Microsoft's Windows 8 operating system. Analysts have been reviewing a beta version of the operating system and have written positively about the system's ease of use and - particularly - its ability to integrate desktop computers with smartphones and tablets.
The system, due for public launch later this year, builds on the positively reviewed Windows 7 and strong sales for Windows phones (particularly the hot-selling Nokia Lumia 900), and may finally put Microsoft devices on a competitive footing with iPhones, iPads and Android-based machines.
Taiwan's technology firms certainly hope so. The companies build most of the world's computing devices, often on contract for the big brands. They do not care about the superiority of one operating system over another. However, they invariably catch a sales boost when a hot operating system fuels global demand for products that are made in Taiwan (and, increasingly, on the mainland), be it tablet, netbook or personal computer (PC), smartphone or games console.
The hope is that Windows 8 will provide just such a boost, lifting the revenues and share prices of some of Taiwan's tech stocks.
Windows 8 could add 10 to 15 per cent to the stock prices of Taiwan computer makers, while helping Microsoft compete with Android for mobile devices, analysts say.
'If the performance of Windows 8 is good, it will attract a lot of people to use it, then sales will be good, and that will help stock prices,' says Liang Kuo-yuan, president of Polaris Research Institute in Taipei.
The Taiwan Stock Exchange's tech index rose 13.8 per cent in the first quarter of this year.
Analysts expect Taiwan's two biggest PC makers, Acer and Asustek, to take the lead in using Windows 8 on portable devices.
Both championed the tiny netbooks that were popular in 2009.
Apple's iPad effectively killed the netbook, but there is hope that Windows 8 will give tablet makers a way to compete with Apple.
Acer, among the top five computer makers globally, will install Windows 8 on its desktops, notebooks and tablets, says a spokesman.
Microsoft says Windows 8 will come with full touch support and features to make apps easy to access, a step up from earlier versions.
Microsoft always has an ace up its sleeve in terms of its suite of Office software, comprising applications such as Word and Excel, on which businesses around the world are dependent. Analysts say Windows 8 will indeed make such applications easier to use on smartphones and tablets, which could make them highly attractive to corporations.
Windows software has long ruled the office environment. Windows wants to extend that dominance to mobile devices used by firms, such that a worker's smartphone and tablet could seamlessly talk with his desktop computer.
There's also a Windows Store, a copy of Apple's online apps store.
Not everyone is so bullish. Microsoft is such a relentless promoter of new operating systems that users and analysts tend to be jaded to the Windows 8 hype.
Annette Jump, operating system analyst with the US-based market research firm Gartner, expects businesses to be slow to buy Windows 8, if only because so many recently made the migration to Windows 7. 'This is due to 'fatigue' after major migration to Windows 7,' Jump wrote in a report.
Still, Gartner forecasts that nearly half a million new PCs will be using Windows 8 by 2014.
'Windows will find some [market] stability, as there might be more business users,' says Eric Chiou, research director with the market analysis firm TrendForce in Taipei. He adds that Taiwan tech firms have traditional strength building Windows-based PCs, so any boost for Microsoft in the PC market is good for them, too.
Second-tier Taiwanese companies such as Gigabyte Technology and MSI say they also plan to use Windows 8 in computers arriving in the fourth quarter.
Gigabyte, known best for motherboards, has already built tablets with older Windows systems, designed as a cheap business tool.
Other second-tier Taiwanese brands presented tablets with earlier Windows systems at the international Computex tech show in Taipei last year.
Some were priced above US$700, more than high-end Android competitors, on hopes that mobile business users would be lured by Office software with the systems.
Taiwanese PC makers, whether working on contract or for their own brands, normally stand out against rivals from Japan and Silicon Valley by keeping consumer costs down through a formula of cheap labour and local supply chains. Those supply chains, usually for computer parts, also speed up production schedules.
Taiwanese tech firms had kept a low profile for decades to avoid competing with their contract partners. But they have realised from watching the likes of Acer and smartphone maker HTC that they can use the expertise accumulated from contract work to design and sell their own products, under their own brands, for higher returns.
Android's popularity helped raise HTC's revenues by 67 per cent last year to NT$465.79 billion (HK$122.5 billion), according to HTC.
Taiwanese firms such as Compal and Wistron, which still rely largely on contracts to make laptop computers for the big branded firms, hope Windows 8 delivers a revenue boost.
'I think the excitement will be in the second half ... when the full potential of Windows 8 becomes clearer,' says Wai Ho Leong, regional economist with Barclays Capital in Singapore.
But stock market trends don't follow only the revenues of individual firms, warns John Chiu, executive vice-president of Fuh Hwa Securities Investment Trust in Taipei. Continued strength of Apple products could dent the success of Windows 8, while broad economic problems in Taiwan's major export markets - China, Europe and the United States - could drag down PC maker revenues, he says.
'Stocks might not go up right along with Windows 8,' Chiu says. 'But it's of help, for sure.'