Taiwan has been a worldwide leader in computer hardware manufacturing for many years. Cloud computing, a major paradigm shift for the IT industry, threatens that leadership position. Cloud computing drives the value chain increasingly toward systems software and services. It has a major negative impact on the already marginal profit picture that threatens Taiwan's hardware manufacturing industry, and the Taiwan economy as a whole. The Institute for Information Industry (III) has devised a strategy and technology called cloud appliances for enterprises (CAFÉ) to address the effects of this technology shift. CAFÉ is a major initiative to help traditional Taiwanese OEM/ODM vendors transform themselves from primarily being commodity hardware providers into highly profitable, full-function cloud systems business that can reach worldwide markets. The III develops key system software components (CAFÉ technology components) that can be integrated with partners' hardware and other technology to create appliances that deliver cloud infrastructure and services enabling enterprises to establish private clouds (thus the name CAFÉ). Appliances that offer user-ready services and applications, provide significantly higher value to customers, support higher prices than hardware alone, and thereby increase the profit margin of Taiwanese IT vendors. Key Taiwan hardware vendors that have already adapted the CAFÉ strategy include ASUS, Delta Electronics, GIGABYTE, In Win, and Promise Technology. They are developing, integrating, and shipping cloud appliances that incorporate CAFÉ technology components, as well as their own technology. The CAFÉ strategy has turned the cloud computing challenge into a golden opportunity, moving the IT industry of Taiwan toward the next horizon.