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Netbook Pioneer Asustek Enters the iPad Age Asustek is introducing tablets in response on the Apple blockbuster but nonetheless sees a long term for netbooks. Thus far, investors are not convinced
By
Bruce Einhorn and
Tim Culpan

(Corrects the spelling of Asustek inside the headline)
Little computers happen to be excellent to Asustek. The Taiwanese organization in 2007 released the primary netbook, those low-priced mini-laptops that have been the Computer industry's fastest-growing product for the past two decades. Netbooks now signify virtually forty percent of the Asus brand's product sales and also have been the major factor in supporting Asustek tie Lenovo because the world's No. 5 moveable Pc company, in accordance to researcher International Information Corp.
Now it appears just like the netbook expansion engine is losing steam. Netbooks' share in the global Computer market place will almost certainly be flat this year at twelve %, IDC estimates. As an alternative, buyers are flocking to tablets like Apple's (AAPL) iPad, which give a lot of the benefits of netbooks. For Asustek, meaning producing an enormous push into tablets although looking to persuade firms and buyers that there are still advantages to netbooks.
On May possibly 31, Asustek unveiled its 1st weapons inside the battle in opposition to the iPad: the Eee Pad and the Eee Tablet. Like Apple's unit, the Eee Pad—available next winter—will have a touchscreen, an embedded keyboard, and videoconferencing capability. Unlike the iPad, the Asus machine will sport an Intel (INTC) processor and use the Windows 7 operating system. The Eee Tablet, to hit the marketplace in early 2011, is an electronic book reader with a touchscreen and built-in camera that allows users to write notes on photos. The new gadgets could be "key drivers for Asustek's product sales and earnings progress in the coming many years,Windows 7 Ultimate," KGI Securities analyst Angela Hsiang wrote in a June 1 report.
Asustek will have plenty of competition, even aside from the iPad. Dell (DELL) has introduced a mini-tablet called the Streak, and almost every other Computer maker has a tablet in the works,Microsoft Office Ultimate 2007 Product Key, though some have delayed launches within the wake of the iPad. Although the new Asus machines will hit stores before most from the competition, traders clearly have doubts about Asustek's strategy. Its Taipei-listed shares dropped 18 % this year through Might 17, when stock income were suspended pending the upcoming spinoff from the company's manufacturing arm. One investor worry is that Asustek can't provide as several apps as Apple can. "They have a very great products but the environment is not ready; there's nonetheless not enough content," says Robert Cheng, an analyst in Taipei with Credit Suisse (CS). Another problem is that the Eee Pad will have about six hours of battery life,Buy Microsoft Office 2007, four hours less than the iPad.
Asustek CEO Jerry Shen believes he nevertheless can tap a vast corporate marketplace for netbooks. The business is tinkering with design, moving away from the current clamshell look to sleeker one-piece models—a kind of tablet shape but with a physical keyboard. Asustek "will have a lot of different types of netbooks that can nevertheless provide a better user experience" than tablets, says Shen.
To hedge versus an enormous decline in netbook popularity, Asustek is heading upscale. In Might the organization launched notebooks with Bang & Olufsen sound systems and launched a line of laptops with bamboo on the lid, using 20 percent less plastic than other machines. "We nonetheless have a lot of innovation going on," Chairman Jonney Shih says, showing off the private lab adjacent to his office where he retreats to clear his mind by tinkering with Asus gadgets.
One of Asustek's most offbeat innovations is its product-testing strategy. A Buddhist vegetarian, Shih is a supporter of the Tzu Chi Foundation, one of Taiwan's biggest Buddhist charities. He enlisted Venerable Dharma Master Cheng Yen, the foundation's 73-year-old founder, to help test e-readers. Cheng Yen "is the best quality assurance," Shih says. "She is so patient." As Asustek tries to match the iPad, he'll need patience from customers,Microsoft 2010 Office Professional Plus Sale, too.
The bottom line: Asustek is working on new tablets as income of its mainstay machines, little netbooks,Office 2010 Professional Sale, begin to flatten.

Einhorn is Asia regional editor in Bloomberg Businessweek's Hong Kong bureau.
Culpan is a reporter for Bloomberg News
.