Buoyed by its ZenFone series smartphones, Asustek Computer has captured a portion of the global smartphone market and more importantly has started generating profits from its handset business.

Company CEO Jerry Shen expects the company to ship over 20 million smartphones in 2015 and further expand to over 30 million in 2016, hopefully to be included as one of the top-10 vendors globally. Shen further outlined the company's strategies and advantages for the development of its handset business, as well as its roadmap for 2016 during an interview with Digitimes in Jakarta.

Q: What is the sales performance of Asustek's smartphones in Indonesia in 2015 and what is the target for 2016?

A: We will ship about 3.5 million smartphones in Indonesia in 2015, accounting for the highest proportion of our overseas shipments. In fact, most countries in the region are all important markets for us, and we are performing well in these markets. We currently rank as the second largest smartphone vendor in Indonesia with a 12% share. We also are in second place in Malaysia and third in Vietnam. We are one of the top-three foreign brands in the Philippines, but a bit slower in Thailand.

We aim to ship at least five million units in Indonesia in 2016 with a 15-18% share and retain the number two position in the year. Our combined shipments to Malaysia, the Philippines, Vietnam and Thailand will also surpass five million in 2016.

Our performance in India is also highly expected in 2016, and India together with Indonesia and China will account for the top-three markets in the year.

Meanwhile, sales of smartphones in Taiwan will total two million units or 20% of our total shipments in 2015, and Taiwan will remain as one of our top-six markets in 2016.

Q: What are the advantages for Asustek in Indonesia?

A: In addition to the high price/performance ratios of our products, the established traditional sale channels we have in Indonesia are our strongest advantage. Asustek is the top vendor of notebooks, motherboards and graphics cards in Indonesia, buoyed by its comprehensive sales channels and marketing strength, the forces which are also driving our smartphone sales in the market.

We are also selling smartphones through telecom and e-commerce operators. The sales ratio via telecom operators is still relatively low but for sales through e-commerce operators, the ratio is getting higher gradually. We will continue to deepen our deployments through traditional retail channels, telecom and e-commerce operators.

Q: What is the market acceptance for high-end smartphones in Indonesia and other Southeast Asia markets, and what is your strategy?

A: Our strategy is to bring the highest price/performance ratios to every model in each segment. In Indonesia, the ratio of models priced over IDR3 million (US$219) is not high. For example, Asustek's ZenFone 2 is priced over IDR3 million, but the model is selling at a rate of 30,000 units a month. The ZenFone 2 Deluxe Special Edition we launched recently targets a higher segment. Excluding feature phones, sales of smartphones in Indonesia are expected to reach over 30 million units in 2015, with models priced at IDR3 million and above totaling five million units.

Q: The Indonesia government is now requiring local production for 4G smartphones and the use of locally made parts and components. What adjustments have been made to cope with the new ruling?

A: We have been cooperating with OEM makers in Indonesia for a long time. The ZenFone 2 series sold in Indonesia are manufactured by a local OEM. We have amended our strategy following the new rules announced in August and will produce all 4G LTE models locally. In order to cope with the new ruling, we delayed the launch of ZenFone 2 Deluxe Special Edition in Indonesia by one quarter. We currently cooperate with only one OEM maker for production of smartphones and plans to increase the number of production partners.

Q: Asustek's handset business has begun generating profits. How did you reach that point?

A: We have been developing smartphones for over 10 years, utilizing our own industry design, camera module and software teams. Thanks to improving efficiency, our product quality is getting better and better and our prices are reasonable.

Our pricing strategy has been competitive and we don't need to lower our prices at least in six months. The steady selling prices have helped us to ramp up shipment volume. The rise of the supply chain in China has also been instrumental to cost down.

Q: What is your road map for next generation ZenFone 3 products?

A: We plan to introduce one generation of new phone per year and will also limit the number of new models for each generation to a single digit. With the exception of ZenFone Zoom models, the next-generation ZenFone series products are expected to be rolled out in May-June 2016.

Q: How do you assess the rise of the handset supply chain in China?

A: Makers in China's handset supply chain have made fast improvements in a number of areas such as industry design over the past years, but the supply chain in China still remains as one of the choices in the global handset industry. To enable to effective competion against China-based makers, Asustek is also accelerating its efforts to improve product quality and competitiveness.