Asus has worst quarterly profit since 2010, changes product focus

AsusTek Computer Inc (Asus), one of Taiwan’s largest hardware manufacturers, reported their worst quarterly profit in seven years for the second quarter of 2017. Profit was down to US$68.14 million, which was roughly half of the profit for the same quarter in 2016. Asus attributes the poor performance to lower notebook sales and the delayed release of their new ZenFone 4.

Business commenters have said that Asus’s plan to improve these results appears to be an increased focus on their high-margin products, rather than to enter into pricing wars with competitors. Presumably, these competitors include entry-level name-brand products such as the Acer Aspire E15, or off-brand Chinese goods with an acceptable build quality and low prices. This strategy was apparently implemented from June this year as a direct result of declining demand for Asus products.

Focusing on the notebook side of the business, Asus predicts 2017 to have lighter laptop shipments than previous years with only 18 million unit shipments expected by the end of the year. However, the increased focus on high-margin ultra-thin (e.g. ZenBook 3), 2-in-1s (e.g. Asus Transformer Pro), mid-range gaming (e.g. GL502VM), and high-end gaming (GX501 Zephyrus) should result in increased profitability.

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