（Left） More hands mean quicker work. This notebook computer development group, formed by ITRI's Computer and Communications Research Laboratories and R&D personnel from 46 different companies, achieved successful results in just three months.
Are the Chinese, as Dr. Sun Yat-sen once said, really as disunited as a plate of loose sand?
There are some examples that would go to prove so. Stories of firms being done in on the international marketplace "at the hands of their own kind" are no longer news. But a vast project that involved 46 domestic manufacturers in the joint development of a notebook computer succeeded marvelously, being completed successfully in a record time of just three months. Those results not only have made people stand up and take notice but also exceeded the participants' initial expectations.
How did they do it? And how can this model of cooperation open up more room for small companies to overcome the constraints of size?
Every Tuesday and Thursday since last July, the Taiwan Electric Appliance Manufacturers Association had had a problem: its conference room was too small. A crowd of people would be jammed inside wrapped up in a host of meetings, discussions and seminars all day long from 10 A.M. on.
Most of them were in their thirties. Instead of sharp business suits, their standard garb was jackets, sweaters and leisure shoes, topped by ahead of unruly hair.
But don't judge a book by its cover! They were all top managers and research and development personnel from 46 small computer firms, with the word executive in their titles. They were working all out so as not to miss the boat on notebook computers, to give Taiwan's information industry a chance to enjoy a "second spring."
"The early part of this year is the starting line for launching this product on the market," says Clement Lin, associate vice president of international marketing at Mitac International Corp. "At the Comdex computer show in the U.S. last year, nobody even asked about laptops anymore."
The Notebook PC Consortium, formed by the 46 firms along with the Taiwan Electric Appliance Manufacturers Association and the Industrial Technology Research Institute (ITRI), has now entered the mass-production stage of its project, and hopes are that orders will start rolling in at the CeBIT computer show in Hanover, Germany, this March.
It's not without reason that a swarm of makers are rushing to take part in this new product line.
According to Data Quest, one of the most authoritative market research firms in the United States, notebook computers will enjoy an annual market growth rate over the next few years of nearly 100 percent. And Taiwan has to break away from the low end and advance in the direction of high added value if it wants to stay on the throne as the king of personal computer makers.
Firms with R&D capability, such as Acer, Mitac and Modern, all entered a state of "battle readiness" a couple of years ago, but the even more numerous small and mid-sized companies, lacking that capability, were frantic with anxiety.
"At a rough estimate, the cost in R&D to develop a notebook computer would be NT$10 million at a minimum," says Jonny Kuo, president of K.S.Brotherbox Co. "And besides money, you'd also need experts in electronics, mechanical engineering, industrial design, quality control, production and other fields." That's a sum well beyond the means of a small or medium-sized firm.
Fortunately, ITRI's Computer and Communications Research Laboratories and the Taiwan Electric Appliance Manufacturers Association back in May formed the Notebook PC Consortium, in which companies only had to bear a cost of NT$1.2 million to take part.
The 46 firms that ended up joining included manufacturers in computers, electronics, communications and components, not all of them small either: there ware also such giants as Tatung Corp. and Mitac International.Mitac, keeping a foot in both camps, even carried out research and development on its own.
"The notebook computer is a consumer oriented information product, and like a television set, makers won't put out just one model," Mitac's Clement Lin explains. Since opening a new mold usually costs NT$2 or $3million, and a new product could be bought now for just NT$1.2 million, why not give it a try?
Not only that, "we can also bring in more business," Lin adds, looking ahead. "Mitac has the some of the latest technology and equipment, which we can put to good use doing work for other participating companies."
That is also the main reason why computer components manufacturers like Jing Mold Enterprise Co. decided to take part. The development of the domestic computer industry would expand the market for components suppliers, and by participating in the consortium they could get a leg up on their rivals in mastering specifications and winning a share of the market.
The makers' dreams of success do not seem unrealistic. After three months of intense development, twenty of the participating firms jointly displayed a not yet commercialized model at the Comdex computer show in Las Vegas, Nevada, last year. According to unofficial figures, the members have al ready taken orders for around 20,000 sets and are constantly receiving follow-up inquiries.
For ITRI it's an unprecedented achievement.
Set up to assist domestic businesses up grade their technology, the Industrial Technology Research Institute bears two chief responsibilities: First, studying trends in technological development around the world and actively developing technology for the future, and then transferring it to interested firms and helping them in commercialization. The second is carrying out development programs commissioned to it by manufacturers. But according to past experience, the results of cooperation have often left makers dissatisfied.
What the firms complained about most was that the institute, not being in the front line of the marketplace, wasn't able to meet their practical needs. In addition, it didn't understand their production technology, and they were often unable to mass produce the products it developed.
Since many of the companies had had similar experiences working with ITRI in the past, most of them went into the project with the attitude of "well, it's cheap anyway so we might as well have a look." Few of them dared hope it would ever really result in a commercial product.
This time around the institute made a major change in the way it operates. The previous method of transferring technology to firms only after the work of development had been completed was switched to working together with the firms on development. Its Computer and Communications Research Laboratories was put in charge of overall planning and specifications, and then portions of the work were split up among the various participants, to be collected and put together by the laboratories again in the end.
The advantage of that approach was "we could keep a firmer grip on the direction," explains Houng-Ching Shyu, a section manager in the research laboratories. The institute is best at technical research, while the companies best understand the market. With both of them pooling their wisdom, the direction of research could be constantly revised and the companies could constantly receive technology, so that the transfer of technology was complete as soon as the project was finished.
The firms were divided into five sections, for development work, industry coordination, product planning, promotion and inspection, which met with the ITRI laboratories for all day discussions every Tuesday and Thursday. Each firm sent one or two representatives to take part.
According to the contract for the project, each firm, no matter how much manpower it contributed, would be entitled to obtain complete technical information and production rights once development was finished. But because the model for cooperation meant that participation would have a positive effect on the timeliness of the transfer of technology, firms that may have originally counted on "just paying their money and being done with it" all ended up taking active part.
The result was that the 46 firms in the project, under the principle of "from each according to its abilities and to each according to its needs," altogether contributed 120 researchers, 33,000 work hours and NT$60 million in investment, an unprecedented total for a product development project.
"Generally speaking, a product like this would cost about NT$10 million and need around twenty researchers to develop," says Jan J. Chen, vice president of the product division at Lung Hwa Electronics Co. The consortium spent nearly six times that amount in money and manpower. Buying time with money and manpower, the product was launched in a short three months' time, twice as quickly as estimated.
As a next step, the firms plan to take part as a group in the CeBIT fair in Hanover and show off their ability to mass produce up to 1,200 sets a month.
But this display of the power of teamwork makes many companies that looked unfavorably on the project at first and failed to take part feel threatened as well as surprised.
Benson Mo, manager of marketing and product planning at CAF Computer, one of the firms those that didn't participate, says angrily, "Our country's notebook computers haven't even gained a firm foothold on the international market yet, and at the Comdex show last year, they were already being quoted way below sales price. If it keeps on that way, it's the product that will wind up getting hurt in the end." He can't believe that "the history of PCs, where the competitors were all our own people, isgoing to play itself out all over again."
How can a price war be avoided? The consortium hasn't laid out concrete procedures for working with nonparticipating firms yet, but its own members have already reached a consensus on product differentiation.
Special functions and accessories, for instance, can be added for different targeted groups of consumers, and changes can also be made in the shape and style.
Starting with the structure of the present model, "you can come up with a new one by investing just NT$3 or NT$4 million in R&D," Jan J. Chen says.
To help this be achieved, the consortium has collected information on each firm's models and prices as reference for them in differentiation. It has also set a minimum price in the hope of cutting down on cutthroat price competition.
"When makers didn't know each other in the past, it was easy for buyers to frighten them down in price. But now that we've all become friends through this project, it'll be much easier to find out what the real story is!" H.P. Huang, manager of L&L Technology Co., confidently predicts.
The Computer and Communications Research Laboratories and the Taiwan Electric Appliance Manufacturers Association are now proposing a project to develop "X" terminals under a similar formula, and plans to develop super-thin notebook computers and hand-held models are under consideration.
The Taiwan business world, however, has always been strong on production but poor at marketing. Now that a way has been found for "46 cooks to improve the broth" in terms of research and development, the next major goal should be finding a model for them to cooperate in terms of sales and marketing.
[Picture Caption]
(Left) More hands mean quicker work. This notebook computer development group, formed by ITRI's Computer and Communications Research Laboratories and R&D personnel from 46 different companies, achieved successful results in just three months.
Wang Hsi-cheng, an assistant manager at the research laboratories, was the program's driving force.
Manufacturing notebook computers entails high costs and high risks. If a shipment of them were to be returned, a firm could be caught in a serious cash flow bind.
Don't underestimate this little mainboard. It can store circuits in the thousands!
The development of new materials made it possible to produce computers as small as notebooks.
Notebook computers stole the show at the Information Month computer fair.
Just 5.23 cm thick, this little fellow packs a lot of punch. Its functions are similar to those of a desktop computer.
Wang Hsi-cheng, an assistant manager at the research laboratories, was the program's driving force.
Manufacturing notebook computers entails high costs and high risks. If a shipment of them were to be returned, a firm could be caught in a serious cash flow bind.
Don't underestimate this little mainboard. It can store circuits in the thousands!
The development of new materials made it possible to produce computers as small as notebooks.
Notebook computers stole the show at the Information Month computer fair.
Just 5.23 cm thick, this little fellow packs a lot of punch. Its functions are similar to those of a desktop computer.
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