Asus Eee PC's sales success drawing a crowd

Sales of Asustek Computer's Eee PC have soared in its first few months on the market, but success may be its undoing. Rivals are already developing products to compete with the low-cost laptop PC, market researcher Gartner says.

Asus sold out of the 5,000 Eee PCs made available for a consumer trade show in Taipei last week quickly, the company said, typical of the welcome the device has received. A spokesman for the company reiterated its target to sell 3.8 million units next year, and at least 400,000 by the end of this year.

The attraction to the laptop is its size, simplicity and cost. The Eee PC weighs less than a kilogram, has a 7-inch LCD screen, a solid state hard disk and can connect to the internet wirelessly. The Eee PC currently sells for $599 in New Zealand but Asus plans to push down the price soon.

But anything that attracts attention also invites competition from rivals, and market researcher Gartner says the Eee PC is in for trouble.

The Eee PC has attracted so much attention worldwide that other vendors, including China's Hasee Computer, want to grab a share of the market, Gartner says in its Semiconductor DQ Monday Report this week. The difference is that these companies plan to make low-cost laptops at standard sizes and with better functionality, so they're easier to use.

Hasee plans to launch a low-cost laptop soon, but with a bigger display than the Eee PC, a more powerful processor and much more storage, Gartner says. The Q540X laptop will carry an Intel Celeron 540 processor, an 80GB hard drive, a 13.3-inch display, weigh 2.19 kilograms and cost just 2,999 Chinese renminbi ($525), Gartner says.

Hasee couldn't be reached for comment.

The Eee PC itself was built as an alternative to the first low-cost laptop of a similar vein, the XO laptop developed by the One Laptop Per Child Project (OLPC). OLPC hopes to someday whittle down the price of its laptop design to US$100 from around double that currently. Intel has created a similar device in the Classmate PC, which costs around $285, but Intel hopes to lower the price tag to $200.

These devices were made for kids in developing countries, where cost is the main concern and computers are hard to find.