Asustek says two-thirds of Eee PCs will have Windows XP

Taiwan model Freda Fang poses with the new Asus Eee PC during a media launch in Taipei October 16, 2007.

TAIPEI (Reuters) - Asustek Computer (2357.TW), the world's top maker of computer motherboards, said nearly two-thirds of its Eee PCs shipped this year will be Windows-based as consumers embrace the company's low-cost laptop models.

The Taiwan company's branded business last year launched a 7-inch child-friendly Linux-based personal computer priced as low as $200, and new models with Microsoft's (MSFT.O) Windows XP will be priced around $390 to $400.

"About 60 percent of them (Eee PCs) will have Windows XP operating system," Asustek Chairman Jonney Shih said at a news conference.

The Eee PC has won Asustek much recognition worldwide and Shih said his company was keeping its previous target of shipping 5 million units this year versus 300,000 units shipped in 2007.

Sales have been the strongest in Europe, followed by Asia Pacific and China, said Lillian Lin, Asustek's head of marketing.

"There is a huge untapped computer market out there, and we want to get into the next 10 billion consumer market (with these lower cost computers)," said Davis Tsai, President of Microsoft Taiwan.

Industry analysts said the move would be beneficial to the Taiwan company, and Windows' software prices on low-cost models should be cheaper than that of the operating systems used on mainstream notebooks.

"A Windows Eee PC is more attractive to buyers because people are just not used to using Linux-based computers," said Alvin Kwock, analyst at JP Morgan.

Worth around $8.5 billion, Asustek separated this year its branded business from its contract manufacturing operations, which make laptops for Apple Inc (AAPL.O), Dell Inc (DELL.O), Hewlett-Packard (HPQ.N) and Lenovo (0992.HK).

Separately, Shih said Asustek was considering moving some of the firm's contract manufacturing facilities to Vietnam, following other larger contract manufacturers like Compal Electronics (2324.TW) and Hon Hai Precision Industry (2317.TW).

He did not give a specific time frame or investment figure.

Asustek's shares fell 2.66 percent on Thursday, in line with the drop on the benchmark TAIEX index .TWII.

Asustek competes with Acer Inc (2353.TW) in own-brand laptops and with Hon Hai Precision Industry Co and Quanta Computer (2382.TW) in its contract manufacturing operations.

Domestic telecom carrier Far Eastone (4904.TW) also said on Thursday it was looking to invest in local telecom operators in Vietnam to support Taiwan businesses that were moving their facilities there.

Larger rival Chunghwa Telecom (2412.TW) (CHT.N), the island's largest telecommunications carrier, said earlier this week that it plans to step up its investment into Southeast Asia as the telecoms market in Taiwan becomes saturated.

(US$1=T$30.7)

(Reporting by Sheena Lee; Editing by Anne Marie Roantree)