Google Android May Run Asus Netbook, Rival Microsoft Another

[David Farber <dave () farber net>]

Begin forwarded message:

From: "CONNIE GUGLIELMO, BLOOMBERG/ NEWSROOM:" <cguglielmo1 () bloomberg net 
>
Date: February 20, 2009 12:29:20 PM EST
To: dave () farber net
Subject: (BN) Google Android May Run Asus Netbook, Rival Microsoft

and here's another story we put out today...

+ 
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Google Android May Run Asus Netbook, Rival Microsoft (Update1)
2009-02-20 09:03:44.133 GMT


    (Adds timeline for product in second paragraph.)

By Tim Culpan
    Feb. 20 (Bloomberg) -- Asustek Computer Inc., which
pioneered the market for sub-$500 laptops, may install Google
Inc.’s free Android operating system on its low-cost notebooks,
challenging the dominance of Microsoft Corp.’s Windows software.
    Asustek has allocated engineers to develop an Android-based
netbook by as early as the year end, Samson Hu, head of the
Taipei-based company’s Eee PC business, said in an interview
yesterday. Asustek hasn’t decided whether to proceed with a final
product because the project is still under development, he said.
    An Android-powered notebook would extend Google’s rivalry
with Microsoft into the market for software that runs personal
computers, where Windows controls more than 90 percent of the
market. Netbooks, scaled-down laptops that offer basic e-mail and
Internet functions, are the fastest-growing segment of the PC
industry, with shipments projected to almost double this year as
the overall market slows.
    “With the strength of Google behind it, Android could
really challenge Microsoft and steal some market share,” said
Calvin Huang, a computer-industry analyst at Daiwa Securities
Group Inc. in Taipei. “The benefit is the free license and you
can use a lower-power, cheaper processor.”
    Asustek shares have lost 9 percent this year to close at
NT$33.50 today in Taipei trading. Microsoft has lost 7.9 percent
to $17.91, while Google has gained 11 percent to $342.64 as of
yesterday’s close in Nasdaq Stock Market trading.

                         Free Software

    Google introduced Android in 2007 as a software system for
phones. Android is based on Linux, an “open-source” operating
system that’s free and developed by hundreds of engineers
worldwide. Microsoft offers an operating system for handsets
called Windows Mobile.
    HTC Corp., based in Taoyuan, Taiwan, is the first company to
produce Android-based phones, selling two models through
operators such as T-Mobile USA Inc. and Vodafone Group Plc.
Samsung Electronics Co. and LG Electronics Inc. are also planning
to introduce Android-based handsets this year.
    Freescale Semiconductor Inc., the Texas-based computer-chip
maker taken private in 2006, said this week it began discussions
with Taiwan’s Pegatron Corp. to create a netbook design that can
use Android. Freescale expects to be producing chips for the
device in large quantities by the second quarter.
    Google, based in Mountain View, California, designed the
Android platform to be used in phones, with the capability for
the software to be adapted for netbook-style products, company
spokeswoman Carolyn Penner said in an e-mail.

                         Smaller Screens

    Netbooks have smaller screens, lower storage and less
processing power than standard laptops, making them cheaper while
less suitable for high-end tasks such as watching movies or
playing games.
    Netbook shipments will surge to 22 million this year from
11.4 million in 2008 as the overall market growth slows to 3.8
percent from 12 percent in 2008, according to November estimates
from research firm IDC.
    Hewlett-Packard Co. and Dell Inc., the two biggest PC makers,
both introduced netbooks last year. Hewlett-Packard spokeswoman
Marlene Somsak declined to comment on the possibility of using
Android. Dell spokesman David Frink and Stella Chou from Taipei-
based Acer Inc., the world’s third-largest PC maker, also
declined to comment.
    Asustek introduced the Eee PC in October 2007, initially
only offering netbooks running on Linux. After Microsoft jumped
into the market, Windows had 85 percent of mini-notebook market
during the fourth quarter, while Linux accounting for the rest,
according to estimates at research firm Gartner Inc.

                       Opposite Direction

    “You’ve got Microsoft starting out in bigger devices and
moving into smaller devices,” according to Neil Mawston, a
telecommunications analyst at Strategy Analytics Ltd. in Milton
Keynes, England. “Google is, in many ways, moving in the
opposite direction.”
    Based on data compiled by Bloomberg, Google had $8.7 billion
in cash at the end of December, more than Microsoft’s $8.3
billion, which can be spent on research and development of new
products beyond the search engine that generates 97 percent of
Google’s revenue.
    Microsoft, which last month announced 5,000 job cuts after
sales in the division that makes Windows fell 8 percent, said it
expects to keep its lead. While Google offers alternatives,
Microsoft’s Office software continues to dominate the market for
word processors and spreadsheets.

                       Microsoft Confident

    “We remain confident that people will keep on buying
Windows, as we’ve seen strong growth in Windows on these small
notebook PCs,” Ben Rudolph, senior manager for Windows, said in
an e-mail.
    If Google’s office applications replace Windows-based
programs, Android-based netbooks will have a better chance of
succeeding, according to Leslie Fiering, a Gartner analyst in San
Jose, California.
    An Android computer may also operate faster than a Windows
machine. Because of higher hardware requirements, Windows-
equipped computers can take twice as long to boot up as a Linux
netbooks, according to Acer’s Web site.
    “Android is a very lean and open platform,” Asustek’s Hu
said.

--With reporting by Brian Womack in San Francisco. Editors:
Jonathan Annells, Young-Sam Cho.

To contact the reporter on this story:
Tim Culpan in Taipei at +886-2-7719-1541 or
tculpan1 () bloomberg net.

To contact the editor responsible for this story:
Young-Sam Cho at +82-2-3702-1639 or ycho2 () bloomberg net.




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