Letter To Shareholders - Mitac

manufactured for the mainstream market; product lines are wide in variety and cater
to the needs of a larger market across different industries and usages. The company's
corporate servers/workstations are solutions developed for the X86 market; they are
suitable in any space arrangements or operating environments, and are capable of
accomplishing different assignments.
(2) Introduction to the X86 market
ITC's third quarter worldwide server market survey (dated 2009.12) revealed
strong growth of demand for servers in 2009 following the rapid rebound of the X86
server market. Gartner’s 2009 worldwide server market research report (dated
2010.03) also suggested the recovery of server demand; under the thriving of X86
servers in particular, server sales volume increased by 4.5% compared to 2008 to a
total of 2.24 million units worldwide, producing USD 12.6 billion in revenue. On the
other hand, the sales volume and revenues of non-X86 mainframe servers had
consistently declined as more customers switched to X86 servers. The demand for
X86 servers shall become the main driving force behind the growth of the server
market; the annual growth rate of the overall server market is estimated between
5-9% in 2010.
The company has more than 10 years of experience in the design and
manufacturing of X86 servers. It had introduced to the market several Intel and
AMD-based platforms with superior cost/performance ratio which aligned with
consumers' emphasis towards returns on IT investments (ROI). Since X86 servers
had become the mainstream product of the server market, the company is setting its
goals to capture nearly 10% share of the entire X86 server market between 2010 and
2011. Platform-wise, the company is able to capture approximately 10% of the Intel
platform and 40% of the AMD platform. As to specialized project customers, the
company also packages corporate server/workstation solutions to satisfy customers
with special needs.
(3) The future of cloud computing
IDC projected that the market potential of cloud computing services will grow
by a staggering compound rate of 27% per annum worldwide, reaching USD 42.2
billion by year 2012 in terms of market size (IDC Taiwan, Tsao Yung-Huei,
2009/09/12). Investment institution Merrill Lynch believes that the market potential
of cloud computing may reach as high as USD 160 billion by the year 2011
(ZDNET, Tsai Yi-Hsiu, 2009/08/27). The technology industry in Taiwan had even
designated year 2010 as Taiwan's initial year for cloud computing. From world
renowned manufacturers including IBM, HP, Dell etc. to Taiwan’s leading IT
manufacturers such as Foxconn, Quanta, Wistron, Inventec, MiTAC etc. and
software giants such as Oracle, VMware, and Trend Micro, all participants are
targeting cloud computing as the critical IT development for the upcoming year. We
can sense the significance of cloud computing based on the level of attention these
major IT participants are dedicated to.
In light of the enormous commercial opportunities brought forth by cloud
computing, the company has spearheaded its entry with the introduction of the
Yellow River series product line in 2009. The company will continually invest
integrated resources for the design and production of cloud computing products in
wide varieties; offering robust hardware platforms to help customers construct ”
infrastructure as a service” (IaaS) and rack server platform service (RaaS) that meet
the stringent requirements of cloud computing.
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