Source: 遠見雜誌
An Impressive Start to 2021
It is said that managing growth is one of the most challenging tasks in business, but if Winmate’s YTD 2021 growth is any indication, Chairman Ken Lu and his team are up to the task. After winning long-term supply contracts from two global Tier 1 customers last year, Winmate’s earnings and revenues have grown handsomely in 2021, far outpacing its industry peers. In 1Q21, Winmate delivered 67% growth in revenue, 56% growth in net income and a net profit margin of 14%. No other local IPC player matched these numbers. Furthermore, May revenues reached a record high of NT$253mn, surpassing the previous single month record high of Sep 2020 by 20% and rising by 114% versus May 2020.
Winmate is the great enabler of enterprise mobility
When we ask Ken what is driving growth in the rugged tablet industry, he explains, “Winmate is at the forefront of the global mega-trend towards Enterprise Mobility. Even before the COVID-19 pandemic, companies realized they needed to embrace digital transformation to remain competitive. But now, the pace of change has accelerated, and we expect this increased demand for mobility to continue even in the post-pandemic world. Enterprise Mobility is an essential step in implementing Industry 4.0, Edge Computing and smart manufacturing; and our products allow clients to accelerate the process of rolling out these advanced technologies across their global operations. We have more than 25 years of experience in this field, have the most complete library of enterprise mobility solutions, and can help companies solve the challenges they face in each stage of the realization of mobility – including their choice of mobility hardware, data security solutions and operating software. This allows our clients to employ the devices and applications that are best-suited to their industry, eventually allowing their employees to handle work anytime, anywhere, while improving their productivity and efficiency."
Ken continues, “Industries such as utilities, mining, oil, natural gas were some of the earliest adaptors of Enterprise Mobility solutions due to their widely dispersed work force. These industries frequently have high risk work environments, putting higher demands on the durability of mobile devices. Over the past decade, rugged tablets have become indispensable tools to these early adaptors and have been the key tool enabling Enterprise Mobility. Those players who are behind the curve are now investing heavily to catch up. We can and will supply their needs, as we already have a complete line of rugged tablet PCs that are designed to withstand the harshest challenges of these operating environments, such as hard knocks, long drops, extreme high and low temperatures, moisture, dust and even explosions."
Next, Ken explains why Enterprise Mobility is a key enabling capability for Industry 4.0 and smart manufacturing, “The manufacturing industry is using mobility solutions as the lead technology in improving operational efficiency and implementing lean management best practice. According to a survey conducted by PwC, 73% of the CEOs interviewed at manufacturing firms stated that their highest priority in kickstarting their digital transformation is the implementation of Enterprise Mobility. Winmate’s rugged tablet solutions can be used in applications such as production line automation, Maintenance Repair and Operations procurement (MRO) and warehousing & logistics management. They can assist companies in improving internal data transmission, real time monitoring of production status & raw material availability, while at the same time reducing human error. And one thing that makes me particularly proud is that our investment in producing rugged tablets that have bona fide industrial grade durability and stability is paying off. Our clients are extremely satisfied with the ability of our products meet the challenges of the industrial environment and to be ‘always on’.”
When asked what he thinks the outlook for growth in his industry segment is, Ken replies, "Demand is shifting from fixed devices such as rugged screen displays and embedded computers to rugged tablets and rugged notebooks, and we believe that the rugged tablet market will show double-digit annual growth, doubling in size over the next five years. With the combined momentum of this trend towards Enterprise Mobility and continued market share gains, we believe we can achieve top line growth of 20-30% per year."
Winmate’s Next Step: Entering the rugged notebook market
While Winmate is very happy with its success in rugged tablet market over the past several years, the company’s ambitions do not end there. Says Ken, “We have established a firm foothold in the rugged tablet market and have strong product solutions for the key demand segments. Next, we are setting our sites on breaking into the rugged laptop market. Much like the rugged tablet market, the rugged laptop market has an oligopolistic structure with high barriers to entry. We understand this market and already have the technical knowhow necessary to succeed. Our capabilities include laptop casing exterior design, heat dissipation expertise and structural design for interior components, as well as product testing and certification expertise. We are excited about our prospects for success in the rugged laptop market and expect rugged laptops to begin contributing to revenue growth within the next 24 months, while becoming a sustainable driver of revenue growth over the long term.”
Next, Ken explains why Enterprise Mobility is a key enabling capability for Industry 4.0 and smart manufacturing, “The manufacturing industry is using mobility solutions as the lead technology in improving operational efficiency and implementing lean management best practice. According to a survey conducted by PwC, 73% of the CEOs interviewed at manufacturing firms stated that their highest priority in kickstarting their digital transformation is the implementation of Enterprise Mobility. Winmate’s rugged tablet solutions can be used in applications such as production line automation, Maintenance Repair and Operations procurement (MRO) and warehousing & logistics management. They can assist companies in improving internal data transmission, real time monitoring of production status & raw material availability, while at the same time reducing human error. And one thing that makes me particularly proud is that our investment in producing rugged tablets that have bona fide industrial grade durability and stability is paying off. Our clients are extremely satisfied with the ability of our products meet the challenges of the industrial environment and to be ‘always on’.”
When asked what he thinks the outlook for growth in his industry segment is, Ken replies, "Demand is shifting from fixed devices such as rugged screen displays and embedded computers to rugged tablets and rugged notebooks, and we believe that the rugged tablet market will show double-digit annual growth, doubling in size over the next five years. With the combined momentum of this trend towards Enterprise Mobility and continued market share gains, we believe we can achieve top line growth of 20-30% per year."
Winmate’s Next Step: Entering the rugged notebook market
While Winmate is very happy with its success in rugged tablet market over the past several years, the company’s ambitions do not end there. Says Ken, “We have established a firm foothold in the rugged tablet market and have strong product solutions for the key demand segments. Next, we are setting our sites on breaking into the rugged laptop market. Much like the rugged tablet market, the rugged laptop market has an oligopolistic structure with high barriers to entry. We understand this market and already have the technical knowhow necessary to succeed. Our capabilities include laptop casing exterior design, heat dissipation expertise and structural design for interior components, as well as product testing and certification expertise. We are excited about our prospects for success in the rugged laptop market and expect rugged laptops to begin contributing to revenue growth within the next 24 months, while becoming a sustainable driver of revenue growth over the long term.”
How the Journey Began
Winmate began its life as the Taiwan agent for ELO touchscreen products. Beginning in 2005, the company transformed itself into an industrial computer manufacturer and by 2008, it distinguished itself by becoming one of the first manufacturers to develop rugged tablets. After years of continuous innovation and progress, Winmate has now established itself as one of the leading players in the oligopolistic rugged tablet computer market.
Winmate is the innovation and product design leader in the rugged tablet industry
Ken Lu is recognized as the most talented innovator in terms of functionality and product design within the rugged tablet industry. When we ask him if he agrees with this appraisal, he says humbly, "Most of Taiwan’s industrial computer manufacturers are ODM producers, and they are accustomed to following the lead of their customers. The ODM space is extremely competitive in terms of pricing, yet it is not as demanding on the management and engineering team as the brand market is. As a branded player, we are faced every day with the challenge of staying in touch with trends in market demand, as well as defining and creating new segments of market demand. From the beginning, we were not satisfied with simply producing on an ODM basis. We focus on the needs of our end-market customers, searching out and identifying key market segments. Through our intensive product design and development efforts, we have built the ability to be responsive to the needs of these specific niche markets. As a result, we have a very complete ‘library’ of rugged tablet solutions. This leads many of our customers to use our existing product solutions, saving them 18-24 months in development and certification time."
Ken points out, "We began our careers as product managers. So, when developing new products, our starting point was the end application for the product. You could say we learned about our end customers real needs by understanding the demands of the application. Additionally, we did not rely on the distributors that were ordering from us to provide us with industry knowledge. Instead, we visited the end customer together with the distributor so we could fully grasp the relevant industry trends and gain knowledge about end market applications. As a result, we became more adept than the distributors at understanding the demands of each specific application."
In this way, customization became one of Winmate’s core strengths. Says Ken, "We have organized the R&D process into modular units, which allows us to provide rapid design customization services, shortening time to market by 3-6 months.”
Ken continues, with emphasis, “Another capability which is a must have for rugged tablet manufacturers is the ability to successfully navigate the product certification process. As rugged products are used in a diverse array of industries and often in demanding environments, they are designed to be waterproof, dustproof, shock-proof, and even explosion-proof. In addition, they must have stable operation characteristics under adverse conditions. As a result, the certification process is complex and takes a long time to complete, requiring significant up-front investment in R&D, testing equipment and the ‘school of hard knocks’ to learn the demands of each unique application. This is a challenging entry barrier for new entrants and, as a result, only a very few companies have developed these capabilities. It has taken over two decades of investment in design and specialized technical capabilities to gain the ability to successfully navigate the certification process in multiple industry segments. Two key enabling factors of our industry-leading time-to-market product development capability is that we have a certified laboratory and a self-developed testing system in our production facility. This allows our R&D and manufacturing engineers to rapidly test and debug new product prototypes in our own factory instead of outsourcing them to third party labs, immensely shortening the new product development timeline. Additionally, we have a global presence and an international team. Our sales and service staff in the US, China, Germany and Italy are hired locally and have extensive engineering and field application experience. Our CTO is American. So, in both linguistic and technical terms, we speak our clients’ language and we can anticipate their needs."
Winmate wins a long-term supply contract from a Tier 1 EU automotive giant
In 2019, Winmate won a contract to supply a Tier 1 EU automobile manufacturer with rugged tablets for use in its global service network. When we ask Ken to share how this order was won, he smiles and says, “This breakthrough was a long time in the making. Our relationship with this new client began in 2010. At that time, we supplied their production lines with Quality Control rugged tablets. Quantities were limited – less than ten thousand units per year. Then in 2014, we participated in the bidding for rugged tablet PCs for use in the company’s Global Service Center network.” Ken sighs, perhaps recalling the disappointment he must have felt at the time, “Unfortunately, we lost to their incumbent supplier. Based on the merits of our product, we believe the client was prepared to award the contract to us, but our Japanese competitor won out on the strength of their existing supply relationship.”
Perseverance and hard work pay off
“After falling just short in 2014, we redoubled our efforts,” says Ken, “We applied for and received numerous safety certifications from the world’s top product rating agencies, and we onboarded new technological capabilities while upgrading our product. The supply contract for this client’s global service network vehicle inspection rugged tablet is awarded every 5 years. When 2019 rolled around, we left no stone unturned. We had the product quality and technical edge of a 1st tier supplier, combined with a clear price advantage. As a result, we won the bid, and the accompanying order for more than 50,000 tablets over the next five years, with potential for upside based on the clients’ own worldwide sales growth. We have been shipping the product for several months, and we are now working for more wins with 1st Tier global automotive brands.”
“When we won the automotive rugged tablet order, the industry took notice, and we began receiving more inquiries. On top of that, in April of 2020, we secured a long-term contract to supply rugged tablets to a top US supplier of warehousing and logistics solutions. The market for computer hardware for warehousing and logistics applications in the United States is an oligopolistic market. In winning this business, we achieved an industry first. When we were preparing to pitch our product, we realized that we already had the technology to provide rugged tablets for the entire range of applications that the client required. They were in the process of designing and producing their own rugged tablets, and also had an internal policy which allowed outsourcing only for components and modules. We showed them that if they allowed Winmate to supply the entire rugged tablet on a white label basis, they could save tens of millions of dollars in development costs annually. Luckily, this argument gained traction, and they awarded us a long-term supply contract with a duration of 3-5 years!"
The 5-year Outlook: 20%+ annual revenue growth with enhanced production efficiency
When we ask Ken to comment on Winmate’s outlook for future growth, he says, “I’m very focused on providing an attractive ROI to my equity partners. In 2020 and 1Q21, our net margin has been right around 14%. While the component shortage and NT$ appreciation have impacted everyone, don’t underestimate my team’s ability to manage the supply chain, the beneficial effects of larger operations economies of scale and gains in production efficiency. Our goal is to maintain a stable net margin in 2021, while delivering 20%+ revenue growth this year and over the next 5 years. We are very optimistic on the prospects for new client wins and on our prospects for success in the rugged laptop market. Additionally, we will continue to share earnings via cash dividend payouts, targeting a payout of 75% or above.”
If you would like to arrange a meeting with Winmate’s Chairman Ken Lu, please contact yvonnehuang@qtumic.com.
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