Acer's plight: What would you do to fix the business?

Acer's plight: What would you do to fix the business?

Summary: Acer will take years to turn around unless there's some hit or strategic design thinking.

TOPICS: PCs, Hardware

Acer's new CEO, Jason Chen, held his first press conference and disappointed because he didn't have details about future plans. The larger question is whether any plan adds up for Acer.

Reuters noted that Chen spent a lot of time recapping past issues and little on direction and a master plan. Chen is now CEO after J.T. Wang resigned in November. Wang was replaced by Acer president Jim Wong, who lasted a few weeks.

Here's a look at Acer's core problems:

  • Acer is a rollup of Gateway and Packard Bell and rode the netbook wave for a bit. Netbooks tanked with the rise of tablets. All the Acer brands scream commodity computing.
  • The company bet on ultrabooks and touch screens too early, said Chen.
  • Acer is trying to integrate hardware and software with services (who isn't).
  • The company has some momentum in tablets, but isn't a leader by any stretch.
  • It's unclear that Acer has a brand that can compete with rivals.
  • Acer wants to be a cloud computing player with its AcerCloud efforts, but it's not something that's driving sales.

Add it up and Acer's market share fell more than anyone in the fourth quarter, according to IDC.

ACER standings


Bottom line: Chen probably would have loved to outline a master plan for the company, but a rebound will be tricky. Acer will take years to turn around unless there's some hit or strategic design thinking. In the PC market, most of the unique moves are from Lenovo and Acer lacks the scale of the larger players like HP. These revenue and gross margin trends can't be turned around quickly. 

ACER revenue trend


Topics: PCs, Hardware

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  • Acer business, I dunno....

    but their new laptops in the Ultra-thin category are night and day difference from the old models that a lot of big-box stores still sell (commonly found in the "Notebooks" category on the Acer page). The Aspire V5 series are pretty good build quality for the price. They need to sell consumers on that.

    They should drop the lower-quality units from their product line and focus on higher-end models. Also, they have dramatically improved margins for resellers over what they were like a couple of years ago (margins used to be about 3% for resellers, which is NOTHING for a sub-$500 system). Lenovo used to be good, and used to offer better margins, but is getting worse, while Acer is getting better. If Acer dropped the eMachines and Gateway line and just focussed on a streamlined product line so that it conveys premium quality, but in a lower price point than its competitors (i.e. no carbon-fiber Ultrabooks with a $1400 starting price point, etc.), they could do a lot better. They have always been known for making budget machines, but they can leverage their brand and push into slightly higher price points than sub-$400 volume sales. They should look at Visio's line, and replicate that style. They are almost there already - they just need to push that stuff with resellers instead of letting them soak up the uber-cheap crap models with last years processors.
  • Acer's plight: What would you do to fix the business?

    Acer needs to stop making junk hardware. After that they can drop the tablet business and any products with android or linux on them. Focus on quality hardware and devices that people want.
    • The W3 did have poor LCD construction...

      but they put a lot of effort into the W4, and it shows. It's a quality piece of hardware. It looks quite a bit better than Dell's 8" option. Toshiba's 8" tablet is still mostly a no-show with distributors.

      Once the W4 is available in mass quantities, they will update the rest of the lineup with Bay Trail redesigns of the 10" W-series too.

      The R and V5 series are pretty sleek though, and they are already available.

      The Z3-600 is the new 22" jumbo-"tablet" Bay Trail Pentium all-in-one too, and it looks pretty slick, although MSRP is ~$800 and it's a big pill to swallow what with HP's Pavilion Touchsmart 23's coming in with far faster AMD chips with gaming-capable graphics. The Z3-600 might fit into a niche of being unique and "just good enough".
  • Should ask Michael Dell...

    Perhaps Mr. Dell could suggest that Acer shut down its business and give the money to its shareholders. Seemed to work as motivational fodder and a rather good-luck omen for the last company he said that about. :)
  • PC companies need to shrink

    I really don't see any choice for these PC companies other then shrinking and re focusing their business model towards expanding products like tablets, cloud services and reducing the number of PC models they sell. Apple has shrinking Mac sales too, but they keep better control of their manufacturing models so they don't have to sell off a bunch of them at costs. Obviously its a good thing to expand your product line up with new things like Chromebook's and new designs. But at the same time you have to quickly stop making what does not work.