Asus, Gigabyte motherboards to function as separate entities

Vinita Bhatia Mumbai, Nov 23

When Gigabyte announced its plans to bring Asustek Computers

into its fold, there was a flurry of questions. Initially the two companies

announced that a joint venture would be formed to produce Gigabyte branded

motherboards and graphics cards. But this still left a lot of questions

unanswered, especially pertaining to what would happen to Asus' motherboards.

Now a clearer picture has emerged. And that is in the form of

Gigabyte United, a division of Gigabyte International, which will concentrate

entirely on manufacturing mother-boards and cards. While Asus will continue to

function as a separate entity and will still be a competitor for Gigabyte

United.

That is the message Tim Handley, Regional Marketing Manager-Pan

Asia and Pan Africa, Gigabyte United disseminated on his one-day trip to India.

"We don't share our technology with Asus. So, Asus will still be our

competitor," he noted.

"We don't share our technology with Asus. So, Asus will still be our competitor"     -Tim Handley, Regional Marketing Manager-Pan Asia and Pan Africa, Gigabyte United

But would it not make more sense to simply assimilate Asus into

the Gigabyte brand? Not according to Handley. Firstly, because Asus has a

different and distinct brand identity. "Also, Gigabyte has technological

agreements with vendors like AMD and Intel. For instance, we are six weeks ahead

for Dual Core motherboards. If we merge with Asus then that relationship will be

lost," Handley clarified.

Working for the favor of Gigabyte is also the fact that the

channel and customers perceive that Gigabyte has taken Asus over. This way, its

position has been strengthened further among the channel community.

Handley also pointed out that Asus has strong relationship with

OEMs and sold largely to them. On the other hand, 80 percent of Gigabyte's

comes from its channel. By keeping the two companies separate, Gigabyte can

ensure that it continues to meet the needs of two distinct set of customers

without losing out to an external competitor like Foxconn.

Interestingly, for the past two years, Foxconn was trying to buy

Gigabyte. "The reason was simple. Like most Taiwanese companies, Foxconn

business model was to simply manufacture motherboards in bulk to enjoy economies

of scale. It did not have any need to market its brand or create its brand

identity," explained Handley.

But China has emerged as the mass producer for the world and

this put Foxconn in a fix. It did not have a channel or go-to-market strategy.

Also, Foxconn has OEM partnerships and does not sell to the end customer.

On the other hand, Gigabyte had a dedicated and loyal channel, a

robust branding strategy and sold to the end-users. Therefore, Foxconn had been

making overtures to take over Gigabyte as the best route to transform itself

into a popular brand. There was not much else that Foxconn could have done to

upgrade itself into an end-customer brand other than this.

"So before Foxconn could take us over, Gigabyte decided to

merge forces with Asustek Inc and consolidate its position. This joining of

forces has made Gigabyte stronger as a company. Also, we can now make cheaper

motherboards, without compromising on the quality," noted Handley.