PC ODMs in Asia

WSJ writes that PC design is also moving to Asia in the form of ODMs (original design manufacturers):

These are full-service makers that design and build finished products that other companies can then brand as their own.

A growing percentage of products in the computer and electronics industries — it’s hard to know the exact amount — are being designed as well as made by ODMs. The trend represents a new wrinkle in the developing global economy, and one more reason for American tech workers to be a little edgy about their future.

Much of this is happening on Taiwan. During the 1980s, the island became motherboard maker to the world. That’s a big and important business, but not a particularly lucrative one; lots of people are able to take a computer company’s motherboard specs and then mass produce the design.

So motherboard companies began adding in-house design staffs so they could offer more “value-added” services. After a while, they were doing all the motherboard design work themselves, and they soon took the next logical step: designing the entire computer. Lately, they have been branching out into new fields, like cameras and cellphones.

Adam Pick, who follows ODMs for the research outfit iSuppli, says that the ODM phenomenon is most advanced in the notebook computer market, with Taiwanese companies like Quanta Computer, Compal and Inventec designing and making the bulk of the world’s machines.

While it varies from company to company, Mr. Pick says that typically, ODMs do the bulk of the design work on a product, with the client company perhaps making slight customizations of exterior features. That helps ensure that products look different in the marketplace, at least most of the time. It also allows computer companies to say that they help design the product themselves — even though their ODMs are doing most of the heavy lifting.

We will also soon see the emergence of Indian software ODMs – this is probably already happening.

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Rajesh Jain

An Entrepreneur based in Mumbai, India.