TAIPEI -- Two computer-making neighbors in the technologically inclined economy of Taiwan seem headed in opposite directions.
Personal computer sales have slumped worldwide as smartphones and tablets have proliferated and gained in popularity. One Taiwan heavyweight, Acer, has shared in the suffering: It is expected to report a second straight annual loss in 2012 after losing 6.6 billion Taiwan dollars, or $223 million at the current exchange rate, in 2011.
But another Taiwan-based PC company, Asustek, which sells computers under the Asus name, grew 43 percent in the quarter that ended in September, to 6.7 billion dollars in net income. The company's PC sales rose 6.4 percent even as industrywide PC shipments declined 4.9 percent in the last three months of 2012, according to the research firm Gartner.
The companies' divergent fortunes expose both the mistakes and the opportunities for PC makers in an epic shift in the way consumers use technology.
For more than a decade, with no serious alternatives for consumers, Acer, Dell and Hewlett-Packard treated the PC as a commodity: All of their machines used the same Intel chips and Microsoft software and even looked similar, analysts said. In that environment, PC makers made money by focusing on marketing and by cutting costs.
For Acer, much of that strategy was driven by the former chief executive, Gianfranco Lanci, who led the company from 2004 to 2011. During his tenure, the company focused only on marketing and distribution, while gutting research and development and outsourcing design and production, analysts said.
The spread of smartphones and tablets has challenged that business model. Consumers have more choices and increasingly focus on how their devices look and feel, how mobile they are and what content they can provide access to.
"At the moment, the PC market is saturated," said Tracy Tsai, an analyst at Gartner. "When most users have a PC already, they are not looking for just a cheaper notebook. They want something better."
That has meant meager profits or none for global PC brands. H.P. reported a $12.7 billion loss in the business year that ended in September 2012, while Dell's poor performance has resulted in an effort to take the company private.
It is a problem that has manifested itself on the street as well. Stam Chuang, a manager at a retail shop in the Guanghua Digital Plaza in Taipei, said notebook sales at his store had dropped 10 percent during the past year.
"There's only a set amount of demand for computing out there," Mr. Chuang said. "So if consumers decide they want a tablet or smartphone, that share will get taken out of PCs."
Because of its research and development cuts, Acer has struggled to produce smartphones and tablets that can compete with the sleek products from mobile powerhouses like Amazon.com, Apple and Samsung, analysts said.
Asustek, however, followed a strategy that emphasized design and innovation. Its personal computer growth in 2012 was driven by the Zenbook, an ultrathin laptop with a metallic finish, stereo speakers and backlit keys.
Jonney Shih, the chairman of Asustek, said he had foreseen the mobile revolution and wanted his company to differentiate itself from the competition.
"Even 10 years ago, I knew I had to be prepared," Mr. Shih said.
He added that with computer architecture and chips shrinking, he had recognized that "the 'phone computer' was going to happen."
Mr. Shih has become a cheerleader for what he calls "design thinking," pushing his employees to be creative about building products that enrich the experience for consumers. Asustek incorporated a design and artistry category into its employee evaluation system.
The two companies' revenue numbers are similar: In the third quarter of 2012, Acer brought in 87.4 billion dollars in revenue, compared with 96 billion dollars for Asustek, according to Bloomberg data.
But Asustek consistently plows about 3 percent of its annual revenue back into research and development, according to Mr. Shih. By comparison, Acer spent 0.7 percent of revenue on research and development in 2012, according to Henry Wang, an Acer spokesman.
"Asus has been dedicated on research and development," Ms. Tsai said. "R.&D. is their core competence."
The result has been an explosion of new devices from Asustek that often combine the functions of different types of gadgets in one device, creating a new product sector. The company is now the world's third-largest computer maker by market share, behind H.P. and Lenovo.
Its Eee PC, released in 2007, was the first netbook on the market, which prodded other companies to build their own mini-laptops priced at the equivalent of $400 or less.
The Eee Pad Transformer was the first tablet with a keyboard dock that looked like a notebook. It came out in early 2011, a full 16 months before touch-screen laptops were released en masse.
Such experimentation has not always been successful: The Padfone, Asustek's only smartphone, which can dock with a tablet, failed to catch on. Asustek expects to sell 1 million to 1.5 million smartphones in 2013.
But new ideas continue to roll out despite setbacks.
"They somehow created a culture where they experiment a lot, where they try things and throw it out there and see how it works, and if it doesn't work, move on," said Willy Shih, a professor at Harvard Business School who specializes in the technology industry. "You don't see the other players doing it quite at that pace."
Mr. Shih, who is not related to the Asustek chairman, said one of those experiments had caught the attention of Google.
Asustek announced its Eee Pad MeMO 370T, a seven-inch tablet, in January 2012, and Google saw an opportunity to persuade Asustek to market the product under its brand.
The Google Nexus 7 tablet was released six months later.
That partnership has helped lift Asustek's success in tablets. The company shipped 3.1 million tablets in the fourth quarter, growing 402 percent from the same period a year ago, according to the research firm IDC. It now owns 5.8 percent of the tablet market, behind Apple, Samsung and Amazon.
That success has prompted its Taiwan rival to follow in its footsteps.
Acer, which had relied on partners to design the components of its machines, released the Aspire S7, the first notebook it had designed entirely in-house in more than a decade, in October. It plans to raise research and development spending to more than 1 percent of revenue in 2013.
Even though the PC industry is grappling with the proliferation of mobile devices, Asustek's chairman remains hopeful. He believes PC makers are best positioned to build multiple devices and integrate them, if they can return to their engineering roots.
"The best way is, we should leverage what we have," said Mr. Shih, the Asustek chairman. "The computer is still at the heart, so I think we should not be discouraged."interact
This article originally appeared in The New York Times.