Taiwan-based Mio Technology has rested its hopes for brand recognition on its DigiWalker range
Electronics firms often talk about breaking away from the low-margin world of original design manufacturing into more lucrative own-branded products, but few ever make it beyond a few hastily produced devices and some splashy short-term marketing.
One company looking to break that trend is Mio Technology - the Taiwan-based subsidiary of manufacturing and logistics giant Mitac International.
Mitac is banking on Mio's range of Mio DigiWalker GPS-enabled devices to give it the brand name it lacks having built a US$15 billion business in the 1990s on the back of product design and manufacturing - as well as logistics - for the likes of Dell, Fujitsu and Siemens.
'Compared to Nokia and Motorola we are still weak as a brand [having launched Mio in 2002], but if you put all our capabilities together we are quite unique - with software development capabilities and end-to-end embedded PDA systems and communications technology expertise in both design and manufacturing,' said Mio Technology general manager Samuel Wang.
'We may have a chance to win this market if we combine these areas of expertise effectively.'
Mitac's mainland history traces the same path as many Taiwanese and international companies in the 1990s. The company was part of the manufacturing boom in Guangzhou from 1993, before expanding operations to the Kushan Export Processing Zone outside Shanghai. The next step will be to the provinces of Hubei, Hunan or Jiangxi, in line with Beijing's efforts to develop the interior.
Eighty per cent of the company's 40,000 employees are now based in China. Mio Technology accounts for 1,500 of those, including 550 research and development engineers.
But while the firm's manufacturing and logistics facilities are impressive - a new plant will see eventual capacity for Mio GPS devices reach 24 million for a global market of only 10 million units last year - Mr Wang acknowledged that the company's success hinged on making the leap from high-volume manufacturing to compelling design and function.
That process begins with intellectual property.
'We are currently filing 400-450 GPS-related patents in the United States, Korea, Taiwan and China, which will provide us with the intellectual property rights to maintain our position as an early developer in this field,' Mr Wang said. 'We are confident that our competitors are coming to market with products that infringe on our intellectual property, and from next year we will begin enforcing that.'
Mio has already been making in-roads into the relatively under-developed global market for GPS products. Its 800,000 unit shipments last year gives the firm about an 8 per cent market share, and the company is targeting 1.8 million units for 2006.
Yet the biggest boost for Mio and other GPS product manufacturers like it - Sony, Samsung and LG also recently entered the market - will not be fully felt until 2010, when the European Galileo satellite navigation system is expected to be completed.
Analysts say Galileo will have inherent advantages over the current GPS system, which was developed by the US military and is already more than 20 years old.
The Europeans' US$4 billion project boasts a hydrogen maser clock that will allow users to pinpoint their global position to around one metre, compared with 10-20 metres at present. This enhanced accuracy is expected to generate a multimillion-dollar market for location-based services.
'Galileo will be a significant milestone for the industry,' Mr Wang said. 'But the key will be in application integration.'
He predicts a future in which handheld devices will be able to pull real-time location information from service providers about restaurants, shops and even existing menus or special offers.
Mio recently signed a partnership agreement with Nasdaq-listed online games company Shanda Interactive to allow mainland users of the firm's handheld devices to play games over Wi-fi. It is also working with partners in Taiwan and Korea to drive sales.
'The technology will become as indispensable as a PC - once you get used to having it, you can't live without it,' he said.