Asus’ mobile unit had a tough Q2 as it shifted attention to its new ZenFone 3 line, as it also “adjusted” its tablet business to meet weakening demand in this segment.
The share of revenue generated by mobile products at the Taiwanese vendor decreased to 18 per cent from 22 per cent in the year-ago quarter. This, it said, was because the ZenFone 2 was selling well last year, whereas now it is in a product migration phase.
More positively, it noted that ZenFone 3 will come in at a higher price point than its predecessors. But in the short term, profitability will suffer due to “an unfortunate mismatch in time”, as marketing spend on new devices comes ahead of revenue growth.
It noted that this should even out moving forward, as availability of ZenFone 3 broadens.
Asus announced ZenFone 3 in June, with products reaching a limited number of markets “relatively late” in July. After availability in Hong Kong, Malaysia, Taiwan, Thailand and Vietnam, other markets on the agenda are Brazil, China, India, Indonesia, Italy, Japan, Russia, Philippines and US.
The company also said that while at one point tablets had been a significant business, it is now reducing its exposure to this market – although with some products available in some markets – and shifting resources to growth opportunities.
While it is expecting revenue from mobile to increase quarter-on-quarter (up 15 per cent to 20 per cent), it will still be down by around 20 per cent year-on-year. This, it said, is because it is “still adjusting” its tablet business, with later ZenFone 3 availability in the quarter also a factor.
On a group level, net income decreased 11 per cent year-on-year to TWD4.1 billion ($131.7 million), on revenue of TWD93.9 billion, down 5 per cent.
Separately, it was reported that Asus is set to unveil a new version of its ZenWatch smartwatch at IFA 2016 later this month – the third in the series. And it seems the big change will be the adoption of a round design, rather than square.