Opinion: Sheer luxury

Just like “military intelligence” and “working lunch” you know it’s either highly unlikely or there’s a catch.

Asus would like us to believe we can look forward to 20% margins on its new line of “luxury” LCD displays. We’d like to believe them. But it only takes one discounter to destroy margins.

The premise this time, seems to be that because this is a “luxury” or “premium” range of LCDs, only non-discount dudes will carry the products. But our experience is that buyers with lots of money didn’t get rich by throwing their cash around with doing their homework.

Which means they’re just as likely to be bargain hunting, albeit amongst the Armanis rather than at K-Mart. But if there’s any real demand, then the discounters will add the items to their online catalogues – which basically costs nothing to do so.

Far more interesting is whether you can mix “Asus” and “luxury” in the same sentence, regardless of what margins are on offer. Far more likely brands in this context are Apple and Sony, which have both spent a long time educating users to pay a premium for their products.

Asus on the other hand, has built a very well known brand at the other end of the spectrum, with ultra-notebooks selling for under $400, and mid-spec servers going out the door for under $2K. Can the company do a “u-turn on a dime” and switch to premium price point products?

More significantly, given there’s no indication Asus plans to stop selling it’s price-busting entry-level kit, is it possible to have the same brand successful in the high-end high-margin market at the same time?

We’re scratching our heads here trying to recall any other brand where this strategy has worked, even outside the realms of IT. Can you buy a genuine entry-level Rolex? Or an upmarket limousine from Kia? We like the products Asus offers, so good luck to them, but we suspect they’re on a hiding to nothing – along with their margins.