Notebook ODMs turning to horizontal partnerships
Aaron Lee, Taipei; Joseph Tsai, DIGITIMES [Monday 30 June 2014]

Notebook ODMs, turning their focus away from vertical integration, have started establishing partnerships horizontally with players from other industries, according to industry sources.

In the past, Wintel set the rules and ODMs, following the standards, focused their efforts on improving product quality and reducing prices. Therefore, vertical integration was the main business direction for ODMs, the sources said.

However, the arrival of the post-PC era has stripped Wintel of its dominance and the ecosystem is now being dominated by iOS, Android and Windows.

Quanta Computer chairman Barry Lam has said that he expects wearable devices and Internet of Things (IoT) usher in an era where the three major operating systems will lose their dominance, and the market will gradually head toward a new generation that focuses mainly on consumer demand.

To prepare for such a change, Compal Electronics and Wistron have already started cooperating with players from other industries. Compal has recently announced a partnership with Chang Gung University in Taiwan to develop smart clothing that is able to detect wearers’ physical conditions and movements to provide warning for any potential problems. Such smart clothes are set to be released in the second or third quarter of 2015.

Wistron is also working with an industrial PC maker for the IoT industry.

Although most of these investments are unlikely to contribute profits in the short term, ODMs will still be able to gain benefits in the long term, the sources added.

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