ALAMEDA, CA - Computer systems account for 44% of all outsourcing - a figure that will remain constant even as ODMs grab a larger portion of the market, a top research firm said last week. The total value of computer systems market, including revenues from EMS and ODM manufacturing, will grow 25% to $376 billion by 2008 from $300 billion today, predicts Technology Forecasters Inc.

"The opportunity to manufacture computers for brand-name OEMs ... ," said senior analyst Matt Chanoff, " ... remains the largest opportunity available to outsourcers. In short, computer system manufacturing has been and is likely to remain the lifeblood of the outsource manufacturing industry, but today those outsourcing revenues are being captured more by ODMs rather than EMS companies.

Chanoff said Taiwanese ODMs have supplanted competitors to become the top builders of computing products. "In many respects, the dynamics of the industry have shifted. Most dramatically, Taiwanese-based ODMs, with most of their manufacturing capacity in mainland China, have become the largest manufacturers of PCs and notebooks, outpacing EMS companies for the first time in 2004."

TFI also reported on the getting ready for the WEEE directive, identifying concrete ways that companies can reduce material and assembly costs, accelerate time to market and improve product reliability. "We encourage our member management teams to avoid the reactive tactical approach and take a broader more strategic view of the opportunities these initiatives offer both for the environment and the bottom line," said Pamela Gordon, president.

Finally, the firm introduced a new qualitative research tool that combined signals collection and analysis for identifying opportunities in strategy formulation processes and product innovation. The data suggest that one of the main problems for the industry has been a focus on process rather than on customers.

"The data reflect an industry that is reactive by nature and stuck in its standard way of doing things," said Eric Miscoll, principle analyst. "The dominating perspective seems to be recognition of the changes in the industry and competitive landscape but uncertainty as to how these should to be addressed."

TFI focuses on electronics manufacturing outsourcing.

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