Although Sony and Microsoft have cut their game console prices lately, the trend should not affect demand for PCs and DVD players for the moment, as the two products and game consoles target different consumer groups, said Chin Wu, president of ALi Corporation (formerly Acer Laboratories), at the company’s fifteenth anniversary party on May 23. Wu said that there is currently no market overlap problem between game consoles and DVD players, as game console consumers buy the products mostly for playing games and the locations where consumers use these products are different as well. Considering that the price of DVD players has dropped to US$100 and the accumulated number of DVD players sold worldwide in the past few years is less than 100 million units, the market still enjoys great potential for further growth.

Seeing that recent price cuts from Sony and Microsoft have driven prices of the PlayStation 2 (PS2) and Xbox game consoles to below US$200, market analysts predict that if the trend continues, it is likely to erode the DVD player and PC markets.

Though starting up as a core logic chipset supplier, ALi has reaped more significant results from its multimedia product lines, especially from its DVD player servo chips, in the past few quarters, thanks to the strong demand for DVD players. Boosted by the increasing sales, ALi even generated more revenues from multimedia chips than its PC-related products in the first quarter of 2002. Wu said that judging from ALi’s current business, the revenue ratio of multimedia products is expected to keep rising to nearly 60% in the second quarter from the first-quarter’s 51%.

In response to the operation changes, Wu said that ALi is planning to divide its original non-PC product department into two new divisions, responsible for peripheral chip and ODD (optical disc drive) chip business, respectively.

Despite its remarkable sales performance in the multimedia chip sector, Wu said that ALi will not quit the chipset market and will continue introducing new products. At the anniversary party, the company unveiled its latest Pentium 4, DDR400-based chipset, the M1681. The company’s new Advanced Micro Devices (AMD) 8th-generation (K8)-platform M1687 chipset is expected to be launched in June.

To cope with the new policy of its major partner and shareholder Acer, ALi announced a new corporate identity, changing its name from Acer Laboratories to ALi Corporation. The move is expected to further help change the market perception of ALi as Acer’s own research center.