Between supply disruptions from the Thai floods and continued weakness in the US and European markets, the end of last year wasn’t an easy time for many PC companies. HP saw consumer PC sales drop by a quarter, while Dell missed analysts’ profit forecasts as hard drive costs spiked.

Not so for Asus, the Taiwanese PC maker, which on Friday reported a 23 per cent increase in sales in the fourth quarter of last year compared to a year earlier, and a 21 per cent rise in net profits. Likewise, Lenovo on Thursday also reported a hefty sales increase.

What sets these two companies apart is their big exposures to emerging markets. Lenovo has a dominant position in still fast-growing China, while Asus derives much of its income from other emerging markets around the world – it is the top notebook PC vendor in Russia, for example.

By the end of 2011, Asus for the first time accounted for more than 10 per cent of the global PC market, while Lenovo is now the world’s second biggest PC maker.

Jerry Shen, Asus president, said he expected emerging markets, led by China, to continue to grow this year. Overall, Asus expects its shipments to rise by 22 per cent this year compared to last year.

Asus’s success, however, is not just a matter of having picked the right markets to sell to. The company, which is best known for pioneering the netbook several years ago, faced the danger of its star product becoming obsolete. Sales of netbooks – small, cheap notebooks primarily used to access the internet – have been steadily declining ever since tablets burst onto the market. Asus sold 6m netbooks in 2010, but expects to sell just 4m this year.

Instead, Asus has managed the product transition by moving quickly to the next big thing – tablets and ultra-thin notebooks – even though they risked cannibalising their own netbook sales. It also made a conscious effort to move upmarket, with its Zenbook series of ultra-thin notebooks, or Ultrabooks, selling in the $1000 range compared to $199 netbooks.

Those efforts have paid off. The Zenbook, Shen said, “has been our most successful product ever”. Its Transformer series of tablets have also been well-received and Asus aims to become the second-biggest seller, behind Apple, in both tablets and ultra-thin notebooks this year.

Pauline Chen, analyst at Morgan Stanley who this week upgraded Asus stock to overweight, said:

“We expect Asus’s high gearing to emerging markets to enable it to continue to outgrow the market, and its stronger R&D/high consumer exposure to make it an early mover in capitalizing on Ultrabook and Windows 8 opportunities.”

Related reading:
Video: Taiwan’s Asus on beating Apple, FT
Intel’s Ultrabook likely to miss first sales target, says Asus chief, FT Tech Hub
PC makers step up efforts to combat iPad, FT

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