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Corporate Strategy

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Corporate Strategy Quanta Computer Inc. (QCI) is among the 2005 Fortune Global 500 companies. It is also the number 1notebook computer ODM supplier in the world. Quanta has already established a well organized R&D, manufacturing, and supply chain infrastructure. Through selective vertical integration, Quanta has already been offering EMS manufacturing services. Simultaneously co-existing with ODM and EMS, we are aggressively establishing the SSDMM business model.
SSDMM stands for System Solution Design Manufacturing and Move. It is a business model to provide system solutions in specific application markets based on Quanta's strength to integrate multiple products using various technologies. The major difference between SSDMM and ODM is the former provides system solutions whereas the latter is only offering point products. In addition, "Move" in SSDMM means logistics, CTO (Configure-to-Order) and other value-added services such as direct fulfillment .
What is a solution? A solution typically consists of several point products, connected together by either wired or wireless links, and integrated together by appropriate system and/or applications software. All parts of the solution can operate simultaneously and coherently to provide ease-of-use. A solution in general targets a specific application market or industry. To Quanta, most obvious solutions we can provide are automotive solution, digital home solution, enterprise solution, and others. For instance, electronics contents in cars are increasing rapidly. On average, it represents approximately 30% or more of the total cost of a car. The trend is to combine entertainment, navigation, and communication functions into an infotainment system. Quanta can provide an infotainment solution if by integrating GPS navigators, ODD/DVD products, and mobile phones from ASBU, Royaltek, QSI, and WBU. Another example is the enterprise solution. By integrating various servers, switches, broadband access devices, NAS, storage devices, and PC's provided by Quanta with routers and proper system and applications software, Quanta provides an enterprise solution to SMB. Does this mean Quanta Computer Inc. will start competing with its customers? No, it definitely will not be the case. QCI's business model will remain as ODM and EMS and will pursue selective vertical integration to enhance cost competitiveness and increase profit margin. The establishment of CSMC is clearly a move in that direction. QCI is similar to the aircraft carrier of an aircraft carrier battle group. QCI provides a platform to develop point products and supports the manufacturing of these solution businesses. It can also conduct ODM/EMS business with customers to develop and manufacture some system or system solutions. Furthermore, it can be an incubator of certain solution businesses. In general, for notebook business, we still stick to the ODM model. For other products, EMS model could be more dominant.