HWZ : How did Albatron start building motherboard products when they began with nothing?
Kevin : We started in January 2002 and we mass delivered the products in July 2002. Most of the people started from nothing although some had experience. However, we are the second company to actually receive a direct account with Intel although when we first started, we have not even introduced, announced or mass deliver any products. I think 12 years ago, it was ASUS who had a direct account even without having any new product announcement or delivery. We are the second one to receive the direct account 10 years later. I am not saying that Intel has good relationship with our top management, but Intel trust Albatron's R&D, Product Managers and Sales. That's why they gave us this direct account. Many companies, some already existed for 12 18 years, do not really have a direct account with Intel. So, I think from this point of view, we have a good advantage and also good data/information reference from Intel.
During development, most of our products go to Intel's certification lab before the products were mass delivered. It's one of the quality assurance steps that we impose on each product. Albatron is not coming from the angle of profit or marketing, but we go for reputation and brand name first. It means we make very sure that all materials and product performance are good and stable before we deliver them. For a young company, the most dangerous aspect is quality. If you have a very strong brand name like Sony, even if a customer experience one bad product, it doesn't hurt much because people still trust Sony. If you do not have a strong brand, one bad product can spoil your product's reputation. That's why we are really careful when it comes to checking the product's quality. One way is to use good raw materials to make sure our product is different from the rest. That's our first step, even until now. Another way is through product pricing.
HWZ : How big is your motherboard market share right now?
Kevin : I should say for mainboard and VGA, we are delivering an average of 200-250k per month. Motherboards will have about 70% going into the clone market, such as retail and distribution channels with Albatron brand name. VGA will be a bit different, with 50-60% going into OEM. We are the only one currently who built a new VGA and motherboard factory here in Taiwan. This factory will be used to produce only high-end products like Grantsdale or NVIDIA's high-end products. These products are very difficult to produce if you don't have the experience. We need experienced operators and R&D watching and checking every step all the time. All others are sent to sub-factories in mainland China.
HWZ : For motherboards, we don't see other types of chipsets, like SiS, ALi or ATI? Why is that so?
Kevin : The R&D department are already focusing on our partners' products and what the market demands. Like Intel, since we have a direct account with them, we focus on their chipsets first. Also, we are AMD's direct partner, so we go with AMD. We are not saying we're not doing ATI, but we already have a product in the existing segment. For example, with VIA PT800 and ALi chipsets, the levels are quite similar. The Intel 845PE have the same price level and market segment as well. If I have too many products in the same price level, I will conflict with myself. For motherboards, the price levels between different product segments do not have a big difference, so it's quite sensitive. We set our products based on price levels, not that we don't develop these different products. We want our customers to have a total solution based on price segmentation. These products have the same performance and specification, we will allow them to choose the price level of these products, so that they won't be confused. For VGA, it's different because of different memory types and performance although it's the same specification. Also, the memory price fluctuates a lot by types and capacity, depending on the quantity of delivery.