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ASUS who were the first company to launch a Netbook, is now struggling as companies like Acer, Samsung and HP strip market share away from the Taiwanese manufacturer.

During the last quarter, ASUS has seen market share evaporate with sales falling 27%. The company also reported a 94% fall in profits to $13.7M.

At the recent CES Show in Las Vegas, ASUS CEO Jonney Shih admitted that the company was struggling to deliver a new generation of touch screen Netbook’s due to the “complexity of Apple patents” for touch screen notebooks.

During a demonstration at CES of their new Eee Netbook range, featuring Windows 7 touch screen technology, the company twice failed to get their new Netbook to work with the screen freezing as executives tried to demonstrate new models.  

IDC last week said worldwide Netbook shipments went up sevenfold to roughly 4.5 million during the first quarter of 2009 compared to the same quarter last year. Netbook’s comprised approximately 8 percent of all PC shipments during the first quarter.

Despite an early backlash due to uncertainty surrounding the device, netbooks have been grabbing more attention since early 2008, said Jay Chou, research analyst at IDC. Netbooks are attractive as secondary devices because of their low prices and small sizes, he said. Low prices helped fuel netbook sales, although people, in general, have reduced spending during the recession. Asustek is also facing a problem familiar to many small companies that hit it big: how to sustain the success over the long haul.

 

In a desperate attempt to lift sales Asustek, who trade as ASUS, are promising a raft of new products including smart phones developed with Global Positioning System specialist Garmin International and its first low-cost computer using Google’s Android software, an operating system designed for cellphones.

The problem for ASUS, say analysts at IDC, is that several other companies are also planning the same sort of products with phone companies moving into Netbooks and Netbook companies moving into the phone business. An example they say is Toshiba who plan to launch a new Smartphone in Australia later this year.

Besides the new smart phone and Android Netbook due out this year, Shih said Asustek is also looking to offer products like video phones and other electronics for the home.

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