Asus’ Eee PC has become a low-cost laptop to reckon with. Everex has snuck up on the low-cost leader with the CloudBook, and other vendors are rumored to be releasing their own low-cost notebooks in the near future. Will Asus be able to maintain its lead in the market and not just be remembered for pioneering mainstream low-cost computing? Asus CEO Jerry Shen seems to think so and in fact has lots of plans up his sleeve for the triple-E machine. In our hour-long interview, Shen shared that the Eee PC will get:

A 8.9-inch display and Windows XP : Confirming that the machine shown at CeBIT will come to market in April, the new Eee PC will have a 8.9-inch screen and a higher 1024 x 600-pixel resolution An 8GB SSD will be available running Windows XP. A 12GB or 20GB SSD model will be available with Xandros.

: Confirming that the machine shown at CeBIT will come to market in April, the new Eee PC will have a 8.9-inch screen and a higher 1024 x 600-pixel resolution An 8GB SSD will be available running Windows XP. A 12GB or 20GB SSD model will be available with Xandros. Hard Drives : Asus is considering giving customers a choice between their current offering of solid state drives and regular hard drives in the future.

: Asus is considering giving customers a choice between their current offering of solid state drives and regular hard drives in the future. Intel’s Diamondville : Shen revealed that the low-cost notebook platform will adopt Intel’s Diamondville processor in Q2 rather than VIA’s mobile computing platform.

: Shen revealed that the low-cost notebook platform will adopt Intel’s Diamondville processor in Q2 rather than VIA’s mobile computing platform. More Colors and Stylish Looks: In May or June, Asus will release “very stylish” versions of the Eee PC. Shen says they will have a New York City sleekness.

Shen thinks the days of the Eee PC are just taking off (and his response to the first question in the interview below affirms that) and that the competitors will try to knock them off their course but won’t succeed. Not his words exactly, but read the full interview to find out more. Asus sold more than 350,000 Eee PCs in the fourth quarter. Have you been surprised by its success and can you share how well it’s doing now? It definitely exceeded our expectations. Originally I hoped it would be around 200,000, so we definitely went above that. In the past few months we have increased sales by 30 to 40 percent; I think shipments will soon total around 700,000. The demand is so strong, especially in Japan and Europe. But there is now a huge shortage of batteries. I just returned from CeBIT and all the customers were requesting more and more. The supply issue is now becoming a serious issue. Do you think it will delay production and bringing the product to market? The battery, unfortunately, will remain an issue, but I think we can solve the battery issue by May. In Europe if we can supply the batteries, the sales of the machines will go up to 300,000 or 400,000 per month. What do you think Asus got right with the first model and what could you have done better? Actually when we sold the first model a lot of users started suggesting an adjustment of the screen size. The current screen size of 7 inches is too small and the resolution of 800 x 480 is too small. We have taken suggestions from the users. But actually 70 percent of the users in Taiwan are satisfied with the machine. But we have to decided to make the changes and provide a bigger machine with bigger screen sizes and more storage. We are actually able to keep the machine the same size, but move the speakers from the side to the bottom of the machine to extend the screen size. Beyond the screen, how will the new machines be different? The screen size will be 8.9 inches. And the storage, which was originally 4GB, will be upgraded to versions with an 8GB solid state drive and a 12 to 20GB solid state drives. We aren’t sure yet if the second machine will be 12 or 20GB because of guidelines we have to follow. The 8GB machine will run Windows XP and the 12 or the 20GB will be Linux based. The Windows XP machine will have 1GB of RAM. The screen resolution on each of these will be 1024 x 600. All these models will have solid state drives, not hard drives? We are looking at an option to provide hard drives. In June and April we will only support solid state drives. Hard drives will be options at a later date. Any information on the pricing on the new 8.9-inch model? In the beginning and in April, around the release date, it will initially be higher and be around $499 in the United States. From the user feedback, I think if we provide a bigger screen and bigger storage it may be more popular than the 7-inch version. The second generation is very important for us. Do you think that by increasing the size of the notebook and making it a bit more expensive it will be difficult to be in a market against notebooks that are more powerful but that have a similar price? I think this is the initial price. I believe in June the market will decide the price and it can drop down. I also think its small size will really attract people. It will continue to be a solid second PC choice or the PC that is good for kids. Will you be sticking with the Xandros operating system for future Eee PCs that aren’t running Windows? I think most of the people are demanding a form of Windows, but others appreciate the Linux. We will stick with both and we will continue to work with Xandros for the Linux operating system. Will you be adding mobile broadband to future Eee PCs? You recently announced that Mobile WiMAX versions of the Eee PC would be coming later this year. Do you feel like that is still on track given problems Sprint is having getting necessary funding to launch its network? I think the Eee PC is all about mobility, and the Internet experience when you are outside is so important on the device. WiMAX and HSDPA built-in will be a goal for us. I think these kinds of features will be out in Q3 2008. We have the module for HSDPA and a lot of carriers and telecoms could take advantage of this. We will put the module in the machines when our partnerships with Telecoms are in place. For WiMAX we are waiting for the maturity of this connection. We will put the WiMAX in when it’s ready but will be aiming to have both by Q3. Will you incorporate Intel’s Diamondville processor (now Atom) or consider VIA’s Isaiah’s processor? Which do you think will be integrated? From my view point, Diamondville is the better choice, because it uses the 45-namometer processor. And pricewise it is very competitive. In my planning I will continue to use Intel’s Diamondville. And for the VIA one I think from the power point of view, Diamondville is still better. In May, these machines will be hitting the market. Do you plan to stick with the color options you have now on future Eee PCs or go with a different set of colors? Actually that is a big focus. In my planning, in May and June we will release very stylish colors and I think more than five color options. I think the colors will really reflect the New York City and London city style. It’s a very flashy look and one will look more oriental and one more Western. There will be a very new color design introduced in June, but I can’t disclose more at this time. But you will be very surprised. What accessories will become available for the Eee PC and what is the timetable for their release? In May we will try to provide storage for the Eee PC. If you buy the Eee PC, you will have additional Web storage; we are thinking 10GB storage. Web storage is very different from local storage and we want to start to experiment with that. Another accessory that we are trying to implement is handwriting tools, like a tablet but it would be an accessory. I think also Skype phones and VoIP phones. You will start to see more TV tuners as well. One of the most innovative features of the Eee PC is the that it doesn’t use a power brick. How did you manage to avoid using a power brick, and will future Eee PCs continue to be brickless? Yes, our new adapter is even smaller and the charge time will be very short. We are trying to provide this new adapter in the beginning of April. It will be available with the 7- and 8.9-inch models. The charging time will be much shorter. In the near future, we also are trying to support one-day computing which would provide more than 8 hours. I think in May we might be closer to providing that. Everex has come out with the CloudBook and there are rumors that HP and Acer will be launching their own low-cost laptop soon. Are you nervous about this competition, and how do you intend to keep Asus at the top of this fast-growing market? We expected company from HP and Acer. In the beginning of April we will be releasing the 8.9-inch and then May and June we will provide another feature for each one. I am proud of my team and the speed in which they can bring things to market. One of our big advantages is that we have people that can do things very quickly. I think if you look at our speed and our features we have a lot of strength there. HP and Acer are very good at providing strong feature sets and both companies have their strengths, but we will be able to play in the race. We have a lot of innovation and we implement those innovations. Innovation in the style and the electronics will let us keep up with our competitors. Are you concerned that this so-called race to the bottom in terms of pricing will cannibalize the sales of your other notebooks? How is the Eee PC transforming the notebook business? I think if we continue to use the smaller sizes with the smaller screens we will be okay. What I have heard from the market competitors is that they would like to increase the size of the screen in low-cost notebooks. I think that will hurt us and them. From Asus’ point of view for the Eee PC, we will keep the smaller size. I plan to keep it at 8.9 or even at 10 inches. I think we are handling it very carefully. I think companies who don’t do this will actually hurt themselves.