Netbook PC pioneer Asustek on Wednesday set a modest 2010 shipment target of 1 million units for its newly launched smartphone, underscoring its vulnerability as a new player in the sector.

That would mean it will have a market share of less than 1 percent in the fast-growing smartphone market, which research firm Gartner expects will grow to shipments of more than 200 million units next year.

We're going to focus on getting our products to work first before trying to meet our targets next year, Asustek Chairman Jonney Shih told reporters during the launch of its smartphone line it is building with navigation device maker Garmin.

The smartphone, to be sold using the Garmin-Asus brand name, will run on Microsoft's Windows Mobile platform, at a time when some industry watchers are saying the software is faltering against bigger rivals.

Asustek's launch of its smartphone would make it the second major PC firm to begin selling smartphones this year, just months after bigger cross-town rival Acer also began selling these feature-jammed devices.

The world's No. 2 PC maker Dell has also said it is working with China Unicom to develop a line of mobile devices for the Chinese telecoms operator.

Many analysts say the move toward smartphones is necessary for PC makers as their products become increasingly similar and as they face rapidly thinning profit margins.

It's going to be extremely difficult for Asustek and other PC makers who are trying to enter the smartphone sector, said Andrew Chang, an analyst at the Daiwa Institute of Research.

They're completely different markets altogether.

Asustek gave its forecast after the Taiwan stock market closed on Wednesday, and ahead of its second-quarter results next Tuesday. Its shares were up 1.57 percent, outperforming a flat showing on the benchmark TAIEX share index.

(Reporting by Kelvin Soh; Editing by Ken Wills)

Electronics Dell