Taiwan: Designing Its Way Up the Ladder

eWeek discusses the burgeoning design capabilities of Taiwanese laptop firms....

As competition in the fast-paced IT world intensifies, Taiwanese firms are trying everything they can to give their clients added-value services.

Taiwan computer makers such as Quanta, Asustek and Lite-On Technology Corp. have all created their own design teams, earning reputations as new product pioneers and winning awards in global competitions.

"Over 80 percent of the world's notebook computer design is outsourced to Taiwan now," said JP Morgan analyst Alvin Kwock.

Having design teams close to the manufacturers has also become more strategically logical for foreign tech firms, said Kwock. Most final production is done nearby, in mainland China.

Contract makers are using their design capability to distinguish themselves from one another, realising sophisticated design capabilities can attract customers who want everything from MP3 players to mobile phones and laptop computers.

"At some point you can't compete on cost alone, so you have to turn to design," said Markus Wierzoch, a product design manager for Asustek.

The move to design marks a coming of age for Taiwan firms, which have migrated from pure manufacturing work, or Original Equipment Manufacture (OEM), in the 1980s to a new type of work, called original design manufacturing, or ODM, starting in the 1990s.

As competition heats up, the level of design services offered in Taiwan has increased as well, as players try to distinguish themselves in industries where margins are already razor-thin.

As a result, the island is earning a name for its new generation of young engineers and designers who are winning awards in global competitions for their work.

"Perceptions regarding Taiwan's design has really changed a lot in the past five years or so," said Wierzoch.

While awards may be a pat on the back, the Taiwanese firms are less motivated by prestige and payment than by sheer necessity.

Quanta Computer, the world's largest notebook contract maker, whose main clients include Dell and Hewlett-Packard, said its design development services are provided almost free of charge for big customers since competition is so intense.

"It is what Taiwan makers have to do to survive," said JP Morgan's Kwock.

And to think the grandparents of these designers made their living sewing handkerchiefs in living room factories and walking to work because they couldn't afford a bicycle.

Laptop design is only one facet of Taiwan's world-class design capabilities, which are also manifest in sporting goods, semiconductors, gambling and gaming equipment, and many other fields. Don't underestimate the island -- there's a great future here if people are willing to reach for it.

UPDATE: nostalgiaphile over at The Blog Formerly Known as the Leaky Pen has some good comments on the article as well.
[Taiwan]