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PC vendors look to touchscreens for magic touch

Touchscreen PCs could move from the margins to the mainstream as falling LCD prices, advances in technology and applications in high growth markets prompt computer makers to take a closer look at the sector.

Their interest follows the wild success of Apple's iPhone, which has led to a parade of knock-off cellphones by everyone from industry leader Nokia, Taiwan's HTC and now Research In Motion, whose BlackBerry Storm began flying off store shelves this month.

The niche could get a further boost from Microsoft, which has said it plans to support touchscreen technology in Windows 7, the successor to its Vista operating system.

“These computers are challenging the way we interact with a computer,” said Bryan Ma, an IDC analyst.

“The phenomenon hasn't really taken off yet, and we're still seeing just a few early starters, but it'll be very interesting to see what's going to happen.”

Touchscreen PCs, which use a specialized kind of liquid crystal display (LCD), could take off quickly if designers find applications that take advantage of their greater flexibility over keyboards, said DisplaySearch analyst Jennifer Colegrove.

Writing text in non-letter-based languages such as Chinese is a good example.

“Keyboards are not optimized for typing Chinese and other east Asian languages,” she said.

“Test audiences who have had to type in Chinese have been extremely receptive of touch screen PCs that they can write on. This could potentially mean massive inroads for PC vendors in the massive Chinese market.”

Touchscreen PCs have been around for more than a decade, but their high cost and limited functionality have kept them out of the mainstream, leaving them limited to specialty devices such as those often seen in restaurants and supermarkets.

Touchscreen notebooks currently account for less than 1% of all notebook shipments in Asia, according to IDC.

But recent advances in technology including improved picture quality and better sensitivity to touch, combined with falling LCD prices, are increasing the viability of touchscreens.

Most analysts said it is still too early to tell if touchscreens will take off for PCs like they have for cellphones.

But Taiwan's Asustek, which is betting heavily on the technology, said it believes increasingly popular desktop models that combine the traditional PC box and monitor into a single unit could be ideal candidates for touchscreens.

It said such models, known in the industry as all-in-ones, could eventually account for as much as 40% of the global desktop market.

The world's top vendor Hewlett-Packard was first out of the gate last year when it launched its HP TouchSmart, a high-end touchscreen PC with a price tag of $1,499 targeting users of graphics and other sophisticated design programs.

Asustek threw its hat into the sector this month, trying to make the product more mainstream with an all-in-one model, the Eee Top, aimed at home based Internet users.

With a price tag of $649, the Eee Top is less than half the cost of a TouchSmart.

The company is aiming to ship 5 million Eee Tops within two years, equal to about 40% of its total 2008 unit sales.

The lower cost of Asustek's computer might just be the catalyst needed to tempt budget-conscious consumers toward the technology, some analysts say.

Other manufacturers are piling into the touchscreen market, with smaller names like Higgstec, Transtouch Technology and Wintek, all based in Taiwan, developing the technology.

Industry watchers say rapidly falling touch panel prices as more products enter the market should accelerate the trend. Already, companies that manufacture panels say they are having trouble keeping up with demand.

“We couldn't provide enough panels to the market,” said Peter Pan, vice-president of sales and marketing at Higgstec, whose sales have been growing at 35-40% annually and which is aiming for an IPO in Taiwan. To meet demand, the company opened its second production facility earlier this year.

Despite the guarded optimism, some skeptics still remain.

Gartner analyst Tracy Tsai said that once people get past the gee-whiz factor, they could also discover other shortcomings with their touch-screen models like the one from Asustek.

“For serious users, this Asustek PC is probably not powerful enough,” she said.

“The ability to upgrade the computer is also limited because the CPU is built into the monitor and doesn't stand alone. Either they make it really cheap, if not, some people may find there's really no need for it.” (Reuters)