Asustek’s Dual-OS Devices Hit a Wall

Asustek’s Dual-OS Devices Hit a Wall

Shelves Plans For Transformer Book Duet TD300

EVA DOU And DON CLARK 

Updated March 14, 2014 12:43 p.m. ET

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Asustek Chairman Jonney Shih introduces the Transformer Book Duet TD300 at the 2014 Consumer Electronics Show in January. ASUSTeK Computer

Plans for a new breed of mobile devices running operating systems from both MicrosoftCorp. MSFT -0.50% and Google Inc. GOOG -1.37% have apparently hit a wall, falling victim to opposition from the software suppliers.

Facing pressure from Google and Microsoft, Taiwanese personal-computer makerAsustek Computer Inc. 2357.TW +1.21% has indefinitely postponed plans to sell a high-profile device designed to simultaneously run both Android and Windows software, people familiar with the matter said.

The Taiwanese company unveiled the Transformer Book Duet TD300, which converts from a tablet to clamshell-style laptop, in January at the Consumer Electronics Show. The device was slated to go on sale in the first half of this year.

Dual-OS devices were widely seen as a boon to chip giant Intel Corp. INTC -0.28% , which has been trying to spur interest in PCs amid flagging sales as well as build a foothold in tablets. Brian Krzanich, Intel’s chief executive, showed the Asustek convertible device during his CES keynote.

Such hybrid products, in theory, could appeal to buyers looking to deal with both work chores and leisure-time activities. They could allow users to run PC-oriented application programs as well as mobile-style apps developed for Android tablets.

But the software companies have ways to exert pressure to deter the propagation of dual-OS products, people familiar with the situation say.

For example, though versions of Android are available under open-source licenses that give Google little control, those that allow access to Google’s app store must be approved by the company, said Patrick Moorhead, an analyst at Moor Insights & Strategy. And Google has little incentive to approve dual-OS models, since that could help Microsoft move into mobile devices where Android is dominant. “Google wants all-Android devices,” he said.

A Google spokesman declined to comment.

Microsoft has its own reasons for not wanting to share space on computers with Google, particularly on business-oriented desktop and laptop PCs that could give the Internet giant an entry point into a Microsoft stronghold.

Computer makers that make dual-OS machines risk jeopardizing a flow of marketing funds from Microsoft that are an important economic force in the low-margin PC business, Mr. Moorhead said.

Besides postponing the new convertible device, Asustek will stop selling the dual-OS Asus Transformer AiO P1801 and P1802 all-in-one PCs launched last year due to Microsoft’s “new policy” of not supporting dual-OS products, according to an internal Asustek memo circulated to some employees and obtained by The Wall Street Journal.

A Microsoft spokesman said its policies haven’t changed for PC makers.

“Microsoft will continue to invest with OEMs [original equipment manufacturers] to promote best-in-class OEM and Microsoft experiences to our joint customers.”

One person familiar with the situation traced conflicts with Asustek to Microsoft patents. Microsoft has sought patent royalties from several hardware makers using the Android software, claiming it owns some mobile patents used in Android.

Asustek, typically known to consumers as Asus, grew up in the PC industry but has made forays into mobile devices like tablets and smartphones. It has products that run Android as well as Windows, the mainstay of PCs.

Though shifting between operating systems isn’t a new concept, Asustek’s TD300 device had a selling point called Instant Switch. The company said it would allow users to switch between Windows and Android with one simple command, whether the device was configured at the time as a tablet or a laptop.

The suspension of Asustek’s dual-OS tablet was reported last month by the Taiwan-based publication Digitimes.

Samsung Electronics Co. 005930.SE -1.16% also announced a dual-OS tablet last year, a product that it hasn’t begun selling.

Intel, based in Santa Clara, Calif., has long relied on its partnership with Microsoft in the PC market. But it has increasingly hedged its bets, in part because Windows has failed to gain a major foothold in either smartphones or tablets.

The chip maker has worked hard to make sure Android works as well on Intel microprocessors as those based on chip designs licensed by U.K.-based ARM Holdings PLC. Intel also supplies what the industry calls firmware—software stored on chips called read-only memory—that can support both Windows and Android, Mr. Moorhead said.

Mr. Kraznich, in a meeting with analysts in November, said Intel would increasingly help companies ship new PCs or tablets to distribution channels without buying or installing operating systems. Hardware makers, in that scheme, could load the desired software at the time a customer orders a system.

Other Intel executives have said customers in China seemed particularly interested in the dual-OS option.

One person familiar with Intel’s thinking traced the idea for such machines to computer makers, but said Intel provided assistance and gradually got more enthusiastic about the dual-OS concept.

“Intel remains committed to supporting our customer plans for our platforms, and to help them bring to market the best user experiences,” said John Mandeville, Intel’s Asia corporate public-relations manager

 

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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