The man behind the netbook craze

    A computer for the masses

    Asus is Taiwan's HP and Apple rolled into one. It is the No. 1 seller of notebooks there, but its laptops win for their performance, reliability, and style, not their discount prices. Asus has notebooks covered in leather, hand-polished steel, even bamboo.

    But Shih's ambitions extend beyond what clearly is a maturing market. He wanted to build a machine for the next billion PC customers. His breakthrough notion was to provide a device that offered good enough performance to surf the web and do simple computing tasks in a very easy-to-use, affordable package.

    Fortuitously, Intel at the time was working on a chip that would help Shih accomplish his goal. "Behind the scenes we had been working on Atom, our low-cost, lowpower chip," says Sean Maloney, Intel's executive vice president. "Jonney immediately wanted it." The question was how to package a machine around it.

    For three months Shih and the head of Asus's motherboard business, Jerry Shen (now the Asus CEO), personally worked out the basic concepts: what features to include (Wi-Fi, a touchpad, and a solid-state drive) and what to throw out (Microsoft Windows, initially, and a full-size keyboard). Then they brought in a team of engineers to make their ideas real. At one point, as they struggled over the machine's software interface, Shen locked the team in a Taipei hot-springs hotel for two days. They finally emerged with their answers. When the first few thousand EeePC netbooks went on sale in Taiwan in October 2007, they sold out in 30 minutes.

    Like other tech companies, Asus was hit by the global recession, and last winter it posted its first quarterly loss in the company's 20-year history. The company has cut costs through layoffs and salary cuts, and has scaled back its inventory. More recently, however, Asus has rebounded, blasting through analyst estimates for its third quarter, and its stock is trading at a 52-week high on the Taipei Exchange. (Asus has made Shih rich, but his only concession to his wealth is a chauffeur-driven Volkswagen Phaeton. "It's 80% of a Bentley and half the price," he jokes.)

    Asus, which gets 40% of revenue from Asus-branded technologies, is forecasting a 30% increase year over year in netbook and notebook sales in 2010. Of course, rival Acer also forecasts growth, and the maker of the Aspire One model isn't likely to cede its No. 1 position in netbooks anytime soon. And so Shih is spending his time meditating about Asus's next industry-changing hit.

    The next netbook

    At Asus headquarters in a bright corner room filled with fabric swatches and beanbag chairs, the next phase of Shih's clear thinking is being prototyped. This is the company's top-secret design lab. Lying on counters are notebooks that look as if they are folded, origami-style, from sheets of aluminum. Others have keyboards that slide back and slightly up when the case is opened for a more ergonomic position. An international team of designers swap ideas on couches.

    Shih's instinct tells him that the "next netbook" won't come from an engineering specification but from understanding how people use devices to communicate, get work done, and play. More than ever he is pouring company resources into design.

    He pulls out a prototype of the forthcoming Eee Keyboard, an aluminum-clad keyboard with a touchscreen on one side. Via a wireless connection, it turns a flat-screen television into a websurfing, Facebook-friendly device. From his pocket emerges a smartphone that Asus developed with navigation company Garmin (GRMN).

    The Asus-Garmin phone has been a dud, and the keyboard isn't out yet, but those items suggest that Shih is thinking about more easy-to-use, affordable products that are integrated as part of a digital lifestyle. "My competitors are doing their own version of the EeePC," Shih says, "but I don't know if they have the vision of how everything can work together."

    Is Shih's insight about integrated technology the "giant lion" that will help Asus regain its leadership position in netbooks? It hardly sounds revolutionary, but by now rivals know better than to underestimate Shih, especially when this "bad Buddhist" is thinking clearly.