PM Forum - Q3/2003: Part 2

4. Profit margins for motherboards have shrunk in the recent past, and with chipsets integrating more and more features on-die it has become exceedingly difficult for motherboard makers to differentiate their products from competitors. Onboard sound and LAN are standard nowadays; even the lowest-end motherboard comes with these features. Serial ATA RAID, IDE RAID, and even wireless technologies are now starting to become standard as well. What should consumers expect to see one year from now? How will companies distinguish their products?

PM #1: From next year, new technologies like DDR-II & PCI Express will be the major changes to desktop motherboards. In order to make differentiation, we will continue improving on ease-of-use, developing useful hardware & software features.

PM #2: One year from now consumers could expect to see more of the same, although the technology will have evolved to such architecture as UAA, PCI-E, and integrated 802.11b. Companies will have to focus on price, ease of use, and functionality to stand out among competitors. More than likely, strong, highly visible marketing will play more of a role in pushing desktop solutions to the mainstream audience.

PM #3: We believe that besides the technology trends, there is something more that is important and appreciated by our customers: more creative ideas, outstanding performance, more user friendly applications, a great experience with a company’s products, impressive product packaging/outlook, plus extremely high quality and service. These are key elements for us to be successful in the future.

PM #4:

Develop some special features to distinguish product is necessary. More focus on:
a.) Easy to use
b.) Good quality more stable
c.) Excellent performance…
Only easy to use and add on value features will adopt for end user.

PM #5:

We are trying to make our product satisfy particular user groups. Like making a series product for PC gamers, another series product focuses on multimedia player
Also to deeply understand behavior of these users’ group and work on user friendly features for them, hence, even with the same chipset spec., but different series product will have different features for each field.

PM #6: Wireless LAN, Dual LAN, High speed SATA

PM #7:

Besides the productivity, one good thing for technology is bring down the cost. “Affordable technology” is the trend for the PC industry. A year from now, “faster (better productivity)” & “cheaper (lower total cost of ownership) still are the factors for consumers. As you mentioned: it’s hard to differentiate products from manufacturer to manufacturer…we already foresaw the trend while back ago. The solution for it has been three points:
1. How to develop a product more “humanized (user-friendly)”...
2. Understand the market/consumer needs...
3. Customer-oriented Service...

PM #8: PCI Express is the next industry revolution that will influence the market, not only the M/B, the graphics solution and other add-on cards will need to be re-designed, I see there will be quite a lot compatibility issues with PCI Express for a while, and that is the challenge and chance for M/B manufacturers to find their niche.

PM #9:

Consumers always pay the same price but get more features due to the competition among the IT industry. Next year, they can take advantage of some new specifications, such as PCI express, DDR2, 64 bit CPU and so on.
Our products will be separated by two segments, one is price oriented product, and the other one is spec-oriented.

PM #10: The next area of growth for motherboard manufacturers will be the front panel and mini PC (SFF)...

PM #11: There is no doubt about the trend of chipset integrating more and more function on-die. Consumers can expect that the motherboard manufacture won’t only highlight on the product spec and technology side but also the user friendly, plentiful accessories, outward appearance design and so on. Those will be the points where motherboard makers differentiate their products from competitors.

This is a very interesting question to ask and watch answered, because motherboards are slowly getting differentiated by brand name instead of the features. It seems many of the companies are focusing on the “whole customer experience.” This isn’t just making a product easier to use, but also making the product interface more “humanized,” as one product manger noted.

Purely from a motherboard standpoint, we will almost always see a spectrum of motherboard selection. A good example is the approach of Albatron and Chaintech, who are arguably two of the fastest growing non-tier 1 motherboard companies. Albatron has focused their strategy on providing high quality but very low priced products, which is why their motherboards aren’t feature laden. Chaintech, on the other hand, is focused on feature rich products with less regard to the price point. The result has been good sales to both, because they fit well into their respective niche markets. However down the road, the question becomes with integration will the spectrum of motherboard selection become smaller? For instance, the new chipsets from Intel has more USB controllers than previous generations. Companies like Albatron can cut price points by simply not putting less USB ports on their motherboard, but the cost of the chipset with added USB controllers can’t be avoided.

Price can do a lot for the differentiation of two products, especially if it is by brand name, but we don’t see it as the only issue for the two quarters. The blood letting price cuts have for the most part ended, and the next two quarters will still provide opportunities for other companies to find their life-saver, like Shuttle’s adoption and pioneer of the Small Form Factor.