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Pegatron named as Microsoft Surface fondleslab foundry

Low margins may annoy Redmond's partners

Internet Security Threat Report 2014

Taiwanese electronics manufacturer Pegatron has been awarded the contract to build Microsoft's Surface tablet, and sources suggest Redmond's got a twin strategy for tablets.

According to DigiTimes, Pegatron will be building both the Intel and ARM versions of the fondleslab, with the Ivy Bridge-powered slab going for around $799 (Intel's guide price for Ultrabooks) with a $599 alternative for the Tegra 3 system.

Microsoft didn’t give pricing details at its launch on Monday, but indicated the Ultrabook as a guide price, and sources said Microsoft isn't planning on making a massive margin on the tablets.

This would suggest Microsoft will aim the ARM fondleslabs at Apple, although it would have to take a loss to match the iPad on price. Redmond does this with other product lines it sells at a loss, and may judge this to be a reasonable price to pay in order to get established in the tablet market. And while Intel will welcome more Ultrabook players, companies like Samsung, Dell, and Hewlett-Packard won't.

"I think this is the major purpose of them doing a tablet, as it can enhance their ecosystem, to help them promote and get a lot of developers to make apps to share in their store," Charles Lin, chief financial officer for Pegatron told Bloomberg. "This kind of device may help them to promote their Win8 solutions and demonstrate the strengths and capabilities of the new Windows 8."

Pegatron, which is a spin-off of Asian giant Asus, said in its last financial statement that it expected its shipments of notebooks and tablets to rise 30 to 35 per cent in the second half of the year. It has got good capacity if demand for the Surface proves strong, and it has cash to burn if expansion is needed – revenues grew over 100 per cent to over $2bn in the last year. ®

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