IPad Causes Collateral Damage in Taiwan

Taiwanese companies followed a simple strategy to get to the top of the global electronics industry: When all else fails, cut prices. During the depths of the financial crisis, for instance, Taiwan's Acer and Asustek Computer undercut their bigger stateside rivals by focusing on small, inexpensive laptops known as netbooks. By early 2010, Asustek had become the world's No. 5 PC maker, measured by shipments. Acer shoved aside Dell (DELL) to reach second place, and executives at the Taipei-based company said it was only a matter of time before they passed Hewlett-Packard (HPQ) to become the biggest computer manufacturer in the world.

Now, all else really has failed. Acer revised its sales forecast downward in October and then again in March. On Mar. 31, Chief Executive Gianfranco Lanci suddenly resigned; the company said he'd disagreed with other board members over strategy. Why the change of fortune? Steve Jobs and the iPad, which went on sale in April 2010. Low-end machines from Taiwan couldn't match the appeal of Apple's (AAPL) tablet, which cost about the same. Global laptop sales, which had been rising by double-digit rates before the iPad, collapsed; they grew just 1 percent in the first quarter of 2011. The post-PC era began last year, and Taiwan got blindsided.