iPad challenge looms large at Asia IT show (AFP)

TAIPEI (AFP) – Tablets that match the iPad but at a cheaper price. Slimmer, more powerful notebooks. At Computex, Asia's top IT fair, manufacturers are showing how they plan to face the challenge from Apple's iconic product.

Taiwan-based Compal Electronics made its name as a producer of notebooks for big-league brands like Dell and Toshiba, but it too has now joined the tablet frenzy and is just months away from launching a seven-inch device.

"Of course, iPad is the number one challenge," said Yeta Huang, a Compal senior engineer.

"But we believe there's room for us, with the market size for tablet predicted to exceed 50 million this year. Cheaper price is one area where we're trying hard."

Computex, a sprawling event held in Taipei this week, provides a snapshot of a technology sector scrambling to find the right approach to the iPad, a product embraced by gadget lovers worldwide.

Since Apple's groundbreaking product was released in April last year, a proliferation of brands have hit the market with limited success, and manufacturers have also been hurt by eroding demand for traditional PCs.

Intel Corp, the world's top chip maker, has used Computex to unveil its response to the iPad, a type of thin laptop that it has dubbed Ultrabook.

It is "a new class of mobile computers" that "marry the performance and capabilities of today's laptops with tablet-like features," according to the American chip maker, suggesting the future will not just be all tablet.

"There is healthy room for PC growth, but affordability is key to PC penetration," Intel vice president Sean Maloney said according to the Taipei Times newspaper. "Now is the time to reinvent the PC platform again."

Even so, companies know they cannot ignore the tablet and have moved quickly to enter the market.

Taiwanese PC maker AsusTek Computer set up its first tablet business unit in November 2010, just months after Apple unveiled the iPad.

"Our Chairman Jonney Shih feels the tablet industry has great potential. That's why he decided to establish the new business unit," said Kakuangelo Kuo, a product manager of AsusTek's Eee Pad Business Unit.

"Leading computer brands all have adjusted downward their PC shipments this year as they expect part of the PC market to be eaten away by tablets," he said.

Ray Chen, Compal's president, said that while his company remains confident about the notebook market, where it derives 90 percent of its revenue, it will diversify into tablets and other products.

That way it hopes to raise its non-notebook revenue to 20 percent by the end of this year, Chen said according to Dow Jones Newswires.

Despite all the attention that tablets receive, analysts with a cool view of broad trends in the industry also see continuity in the future.

The good old desktop is not going away, since for large portions of the world's population it remains the only affordable option, they say.

In addition, in many emerging markets the infrastructure is not yet developed enough to make mobile Internet browsing a seamless, troublefree experience.

"Regular notebooks or desktops will feel less pain as demand from emerging markets, such as Russia, China, India and Brasil remains strong," said Kuo Ming-chi, a Taipei-based analyst with Concord Securities.

This demand will help offset the decline of PC demand from North America and Western Europe following the lauch of the iPad and other tablets, he said.

Some dissenting voices are moving to hose down the tablet hype.

"I bought a tablet and after three weeks, I found it can't replace my phone, and it can't replace my PC," Mooly Eden, general manager of Intel's PC client group, told the Asian Wall Street Journal at Computex.

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Lawmakers Bicker Over Budget 'Deal' as Shutdown Deadline Looms

AP

Shown here are House Speaker John Boehner, left, and Senate Majority Leader Harry Reid.

Lawmakers vied for the political high ground Sunday, as they prepared to enter what could be the final stretch of this year's budget negotiations. 

With Washington careening toward a Friday deadline to either come up with a plan or face a partial government shutdown, Democrats and Republicans continued to bicker over whether there is or is not a compromise on the table. 

Aides to both parties confirmed to Fox News that policymakers are indeed working off a skeleton of a proposal that cuts $33 billion from last year's spending levels -- without such a starting figure, budget staff would be unable to write a bill. But lawmakers performed what amounts to a political dance in describing those negotiations, with Democrats sounding as if all that needs to be done is cross a few T's. 

Senate Majority Leader Harry Reid, D-Nev., repeated the claim Sunday that the two sides have "agreed on a number." 

Sen. Charles Schumer, D-N.Y., also said lawmakers are working off a proposal to cut $33 billion from last year's levels. "I'm quite optimistic," he said. 

House Speaker John Boehner, R-Ohio, though, has said several times this past week that there is no deal until all the details are worked out. After President Obama called Boehner and Reid over the weekend, Boehner spokesman Michael Steel said the speaker "reminded the president that there is no 'deal' or agreement on a final number, and he will continue to push for the largest possible spending cuts." 

Boehner claims to be pushing for a package that more closely resembles the House-passed bill, which contained $61 billion in cuts. 

Both sides are trying to protect themselves politically in case talks fall through. A failure to draft a bill for the rest of the year means they would have to either craft another unpopular stopgap bill or face a partial shutdown. 

Right now, staffers are trying to whip up a budget proposal that achieves $33 billion in cuts. That number could rise, particularly if Democrats shoot down too many of the Republicans' policy riders -- which targeted organizations like Planned Parenthood for specific spending cuts. 

Some GOP lawmakers are urging the party to hold its ground while others have indicated a willingness to back off the $61 billion figure. 

Sen. John Cornyn, R-Texas, said Sunday he'd "like to cut more" but that it's up to Reid to take the next step. 

Members of Congress nevertheless kept up the drumbeat of accusations, with the GOP accusing Senate Democrats of dropping the ball and Democrats accusing House Republicans of listening too much to the "extreme" Tea Party. Reid went so far as to call Republicans' House proposal "mean-spirited," saying it goes after "poor little children" by cutting funding to Head Start, an assistance program for low-income children. 

Both parties tried to use the latest jobs report to bolster their arguments. 

That report, released Friday, showed the unemployment rate dipping to 8.8 percent, with the economy adding 216,000 jobs -- nowhere near where the economy was before the recession, but a marked improvement over where it was just a few months ago. 

Alabama Republican Sen. Jeff Sessions said the job growth could be imperiled by failing to deal with the national debt. 

The debt "creates a threat of a crisis that could put us back into recession," Sessions said on ABC's This Week." "We have got to make changes now." 

But Schumer, speaking alongside Sessions, said the job gains show why lawmakers can't cut the budget too aggressively. 

"We have to deal with the deficit very seriously. But we also have to deal with the economy and job growth," Schumer said. "And we don't want to snuff that out." 

The ongoing debate over the fiscal 2011 budget is just a prelude to the debate over the 2012 budget proposal. Rep. Paul Ryan, R-Wis., chairman of the House Budget Committee, told "Fox News Sunday" that the GOP proposal, set to be unveiled Tuesday, would cut more than $4 trillion over the next decade, through spending caps and changes to entitlement programs. 

Democrats, in response, accused Republicans of protecting corporate interests at the expense of seniors, laying the groundwork for another bitter debate. 

But Sen. Marco Rubio, R-Fla., suggested the course of the long-term struggle over the federal budget will be set now. 

"What we do on the rest of this year's budget will be a strong indicator of how willing and how serious we are about dealing with our debt problem," he told "Fox News Sunday." 

Rubio reiterated his pledge to vote against raising the debt ceiling unless it's "the last time we do it" and is accompanied by "meaningful reforms." 

Cornyn, speaking on CNN's "State of the Union," made a similar pledge. 

Sen. Mark Warner, D-Va., though, said, "it just frightens the heck out of me that anyone responsible would say, let's go ahead and light the fuse that might create the next economic meltdown." 

"You've got to believe cooler, saner heads will prevail on the debt limit as well," he said on the same program. 

Fox News' Trish Turner contributed to this report.

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Larger debt debate looms on the Hill

By Chris Butler, AP

Grover Norquist of Americans for Tax Reform says Republicans will be held to pledges against raising taxes.

EnlargeCloseBy Chris Butler, AP

Grover Norquist of Americans for Tax Reform says Republicans will be held to pledges against raising taxes.

Even as the White House and congressional leaders work to finalize their latest deal, a bipartisan group of senators is seeking to cut $4 trillion from federal deficits over the next decade — 120 times more than the amount being sought to avert a shutdown.

Their efforts represent the most serious assault on federal deficits since a 1997 deal between President Clinton and a Republican Congress led to four years of surpluses. Since then, a decade of tax cuts, wars and recessions have sent the nation deeper and deeper into debt.

DEBT: Who's who in the fight to reduce the deficit Beginning this week in the House, Congress will attempt to reverse that trend. The effort faces opposition from conservative groups opposed to higher taxes and liberal groups seeking to protect Social Security, Medicare and Medicaid. But a coalition of business leaders, budget experts and former government officials is pushing for bold action on the national debt this year.

Three debates on deck Late last month, 64 senators signed a letter to President Obama urging that he support deficit-reduction talks. Last week, budget watchdogs tried to get the same number of former government officials and experts to sign a similar letter. They exceeded expectations when the number quickly grew to 69.

"Not only is momentum building, it's really starting to feel unstoppable," says Maya MacGuineas, president of the Committee for a Responsible Federal Budget, which led the latest letter-writing effort. "I don't think we have until after the election to wait."

As the White House and lawmakers search for cuts from within one-eighth of the 2011 budget devoted to annually funded domestic programs, three broader debates loom over the budget, which includes entitlement programs, defense spending and soaring interest costs:

•The 2012 budget. House Budget Committee Chairman Paul Ryan, R-Wis., plans to release a Republican budget plan for 2012 on Tuesday that will attempt to rein in government entitlement programs. Ryan's "Roadmap for America's Future" features dramatic changes that could boost Medicare costs and reduce Social Security benefits for Americans now under 55.

•The federal debt limit. The government's $14.3 trillion debt limit will be reached this month or in May, forcing Congress to raise it or risk the country defaulting on its obligations. Defaulting would be unprecedented, but many Republicans such as freshman Sen. Marco Rubio of Florida say they won't support more debt without a commitment to major cuts in spending.

•A long-term debt-reduction plan. The best chance for bipartisan action on the debt could come later this year if a group of six senators working in private produces a plan to cut $4 trillion over the next decade that both Democrats and Republicans can support. Led by Sens. Mark Warner, D-Va., and Saxby Chambliss, R-Ga., the group is trying to turn the December call for spending cuts and tax increases from Obama's commission into legislation.

Fueling the bipartisan talks: fear of the economic crisis that would result if the soaring U.S. debt caused international investors to sour on Treasury bonds. On Tuesday, dozens of senators will hear from Kenneth Rogoff and Carmen Reinhart, whose recent paper for the National Bureau of Economic Research warns of future crises.

"This time really is different," Warner says. "There is a sense in the country that we are on as thin ice as any time in my lifetime."

Still, moving consensus from a group of six senators to majorities in the Senate and House appears unlikely, particularly with the 2012 elections approaching and groups on the right and left working against compromise.

On the right, anti-tax advocates such as Grover Norquist, president of Americans for Tax Reform, say they'll hold Republicans such as Chambliss to previous pledges against raising taxes.

"Right now, these people are having impure thoughts about tax increases. They haven't actually voted for one," Norquist says.

Tea Party activists want to prevent Republicans from compromising on a deficit-reduction package including higher taxes.

"Somebody here has to be the conscience of the conservatives," says Dick Armey, a former House GOP leader who now heads the anti-tax group FreedomWorks.

On the left, groups representing seniors and the poor are fighting reductions in Social Security, Medicare and Medicaid.

"One thing you can say about seniors is they vote," warns Edward Coyle, head of the Alliance for Retired Americans.

Robert Greenstein, executive director of the liberal Center on Budget and Policy Priorities, says billions of dollars in Medicaid cuts in Ryan's plan would "start to ration health care by income."

Cuts and increases redefined To get around the opposition, those favoring major deficit reduction are trying to change the terms of the debate. Chambliss says "tax increases, pure and simple" won't pass the Senate — but he views eliminating special-interest tax breaks as "a spending issue. It's a tax expenditure."

Former Republican senator Alan Simpson of Wyoming, who co-chaired Obama's fiscal panel, says: "You don't use the word 'cut' in Social Security. You use the words 'restoring solvency.' "

The wildcard in the deficit talks is the White House. Obama has vowed to act upon some commission recommendations, including corporate tax changes But his proposed 2012 budget had few specific proposals.

Many experts say major action on the deficits and debt may have to await a market-induced crisis.

"The markets, in my view, will force our hand," says Steve Bell, senior director of economic policy at the Bipartisan Policy Center and a veteran of congressional budgets. "We only respond to crises that are palpable."

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