INTERVIEW // Semiconductor shortages, runaway global inflation and falling demand are all hurdles to overcome in the PC and smartphone markets. In this difficult economic climate, Digital spoke with Jonathan Angel, Marketing Director Europe-Consumer PC at Asus.
After two years of the Covid-19 pandemic, Asus has multiplied announcements since the start of the year. At the IFA in Berlin, the Taiwanese firm presented the ZenBook 17 Fold Oled, a way for it to showcase its innovation capabilities and reaffirm its ambitions in a market that is not spared from difficulties. The shortage of semiconductors, global inflation and falling demand are indeed all obstacles to overcome. In this climate, Digital spoke with Jonathan Angel, Marketing Director Europe-Consumer PC at Asus.
JONATHAN ANGEL – I’ve been with Asus for 10 years, and I’ve never seen this… The market kind of self-regulated, then we started to see the first shortages that were causing us problems, with demand growing, exceptional. There was a transition between demand starting to subside and our inventory starting to fill up. Now we are in a situation where the demand has really calmed down and the shortage is increasing. I don’t know if it’s a blessing in disguise, but the fact that this demand is decreasing helps to mitigate the impact of the shortage on our business.
We had anticipated this new demand so much, like the whole industry, with foundries and component manufacturers who produced a lot. Finally, we have a lot of stocks and productions still arriving, and the demand is no longer there. As a result, this shortage, at the moment T, hardly affects the laptop market in Europe, since we have products arriving until the end of the year. For 2023, we will see how the situation will evolve, because it seems that the shortage in the semiconductor market is likely to continue for some time.
For my part, I will not position myself on a date, but what is certain in the PC market at present, by the structure it has and the demand which is weakening, is that we have still a large enough number of productions arriving. In the first part of 2023, I therefore think that we will not have too many problems.
If the shortage continues, or even intensifies, I have questions for the end of 2023. The problem will not necessarily be quantity, because there will always be things. We will have different value propositions for consumers, which we will have to adapt. We will no longer have as much wealth in supply. Today, on the French market, we have a very large wealth, and everything is available. But maybe in 2023, there is a risk that there will be a little less breadth of ranges and a little less possibilities.
This is neither our will nor our strategy. At Asus, we have pricing strategies that are quite clear. Unlike players who do very big promotions, we have well-established value propositions. Admittedly, we have promotions during Black Friday or that sort of thing, but the price variable is perceived differently, especially in France where Asus is the leader and very well established, which is perhaps a little less the case in certain countries. Europeans, where the price card is played out a little more. But on the inflation part, if you take Asus’ price history, there is very little evolution since we tried to smooth that as much as possible between the exchange rate and the components. Afterwards, you have to ask yourself what the consumer will be looking for and how we can possibly adjust our products.
A PC is an incalculable number of variables, between the screen, the RAM, the CPU, the storage… We can always adjust many things to try to be as close as possible to consumer demand, without having to just keep the same product and add 10% to the price. With us, the price impact is very limited, and we try to keep this limit to have a coherent offer, instead of imitating other manufacturers who are increasing their prices in this difficult context.
Before Covid, everything related to supply, logistics and production was the business of a few people. Now, any product, marketing or sales manager is interested in logistics. Everyone rediscovered the complexity of this profession and all the possibilities that flowed from it. We have recruited and enormously readjusted logistics and supply, with a reflection on the means of transport and questions, in particular on the fact of reallocating certain factories in Europe for products such as portable computers for the general public, while the very large part is produced in China at present. All these questions arose and there was a big effort by the teams to adapt.
Historically, Asus has been a very B2C-oriented brand. In recent years, European countries, including France, have tackled the B2B market, but without necessarily a 100% dedicated product. For five years, an effort has been made, both in local markets from a commercial point of view, and from a product point of view with the parent company in Taiwan, to launch the ExpertBook range. The approach was to tell us that we had such a strong footing in the consumer market, but not in the B2B market. But it is a real lever for growth.
The first step was to rebuild the sales teams to succeed in finding the right contacts in the companies. This also went through an indirect distribution network. Rather than selling companies directly, we will rely on partners, wholesalers or specialized resellers who know the companies very well. The first approach focused on SMEs.
We started with this target five years ago, with very good results in this segment. And now we are starting to attack some big companies, like Veolia. We are also entering the public market, with education which has undergone a huge transformation over the past two years. This is a sector with growing needs, with people very open to the idea of upsetting what was done in the past. Conversely, the CIO of a CAC 40 company tends to choose brands that are already well established on the B2B market, such as HP, Lenovo and Dell. But in education, when you have to start re-equipping a number of high schools, people are more open to what can be done. There, we have a card to play and we play it rather well.
France is very well positioned, since it is a country that outperforms in relation to its population and its market. It is the third best performing country in the world, with China and the United States being so big that they will be very difficult to catch up. Asus is stronger in France than it is in Brazil, Russia or Mexico. In France, on the consumer part, Asus has been the leader for 10 years, with 23 to 26% market share. The German and English subsidiaries are also well established, but they are not yet where we are on the French market.
On the consumer side, we will continue to innovate. At IFA, we showcased the ZenBook 17 Fold, and there are more products coming in 2023 to bring innovation to the mainstream. And on the professional part, we will consolidate our ExpertBook range, which must really be very precise in terms of spectrum and configuration compared to the expectations of CIOs. We are also going to consolidate our service and support offers, which involves a very big effort from the parent company to offer all these ranges of services that we lacked in the past.