Taiwan’s Acer Inc. (TPE:2353) is sick and tired of making “cheap” products. It lusts for the kind sleek designs that highly profitable American computermaker Apple, Inc. (AAPL) produces.
Acer CEO J.T. Wang was blunt when he remarked, “We will shift our strategy to improving profitability from pursuing market share blindly with cheap and unprofitable products.”
The candid rhetoric is a sharp departure from that of company founder Stan Shih who in 2010 fielded such wild opinions as stating that Acer’s products were so cheap they would put Dell, Inc. (DELL) and Hewlett-Packard Comp. (HPQ) out of business in 20 years and that Apple was a “mutant virus” that would go the way of “Betamax”. At the time Acer had just stolen the number two spot in global sales from Dell.
However, since then it’s been all downhill for the firm. It began to post losses, its CEO was forced to resign, and suddenly “cheap” was perceived in a whole new light. Suddenly Acer began to aspire to be more like Apple — a premium vendor with large margins.
In 2011, the situation has progressively deteriorated for Acer, despite its change in attitude. Tablet sales passed netbook sales — Acer’s traditional sales driver. Acer had prepared for this launching an Android tablet, but this first crack at the tablet market proved a relative flop, forcing it to cut sales estimates almost in half.
Recent estimates on global PC sales show Acer shedding nearly 20 percent of its U.S. and 10 percent of its global market share, falling to fifth place in the U.S. and fourth place globally in PC sales (excluding tablets).
Acer feels that by focusing on good battery life, a thin design, and light weight it will be able to return to sales success. The culmination of all those characteristics is “ultrabook” a class of PCs first introduced by HP’s “Envy” and Apple’s MacBook Air luxury designs back in 2008. Officially the term “ultrabook” comes from chipmaker Intel Corp. (INTC) and has a strict set of hardware quality requirements for use.
Mr. Wang comments, “Selling more ultrabooks will also help improve our profit margins as they command higher prices.”
Acer’s first ultrabook, the Aspire S3-951, went on sale on Oct. 10, 2011. The 13-inch design is remarkably similar in look to the MacBook Air, complete with a thin metal shell case. It’s currently retailing for as low as $870 USD from Amazon.com, Inc. (AMZN), compared $1,290 USD for the cheapest 13-inch MacBook Air.
If all goes according to plan, Acer hopes to halt the losses and grow 10 percent in 2012. But to do that, it argues, it must stop selling “cheap” junk.
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