Asustek Refutes Rumors On A Split Between Its Businesses

Asustek Computer has denied rumours that alleged that it may end up separating its Open Platform business group and its System business group to form two new corporate entities. While rumours about the split have been floating around for a while, they were recently fuelled by the return of Ted Hsu as Asustek's Chief Strategy Officer. As of now, Asustek makes more money from its Open Platform business group than from sales of products like smartphones, tablets and personal computers. The Open Platform business group deals in development, manufacturing and sales of graphic cards, motherboards, monitors and peripheral products and as per Digitimes, is expected to rake in operating profits to the tune of $185 million in the current calendar year. At a time when Asustek's smartphone, tablet and PC sales are struggling amid fierce competition with low-cost Chinese and Korean brands, experts believe that keeping both groups together as a single entity will bode well for Asustek's overall growth. Even if Asustek is planning to separate these business groups, it has decided to keep those plans under wraps now.

Even though the Open Platform business group is performing well, the System business group isn't faring badly either. Between January and August of 2015, Asustek managed to earn overall revenue of $9.12 billion and shipped an impressive 21 million ZenFones in the entire calendar year. The company also recorded an increase in shipments of its new notebooks that came with Microsoft's latest Windows 10 operating system. With a view to increase its smartphone sales during the holiday season and in the first quarter of 2016, Asustek also upgraded a number of its phones with Android 6.0 Marshmallow operating system like the PadFone S, the ZenFone 2 and the ZenFone 2 Selfie. However, older phones like ZenFone 4, 5 and 6 which had initially launched with Android 4.0 Jelly Bean and had subsequently been upgraded with Android 5.0 Lollipop, missed out on the upgrade.

With Asustek banking on both product sales as well as sales of components like graphic cards and motherboards to sustain its overall year-on-year growth, separation of both entities could be damaging for either of them or for the group as a whole given the overall macro-economic scenario. The sales of smartphones globally declined from 400 million units in Q4 of 2015 to just 291 million units in Q1 of 2016 and that of tablets has declined by 14 per cent year-on-year, in which cases both product as well as component sales would bank on miracles to match last year's numbers.

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