Acer CEO Wang bets on ultrabooks trump tablets: A prescient or nutty bet?

Acer CEO Wang bets on ultrabooks trump tablets: A prescient or nutty bet?

Summary: Acer's CEO says that the ultrabook will trump tablet demand, which is seeing the consumer fever die down. Is he right or delusional?

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Acer CEO J.T. Wang had one of those conference calls on Wednesday that could come back and haunt him. First, Wang noted that it will be impossible for Acer to break even for the fiscal year because the second quarter was a disaster. And then it appears that Wang is banking on the ultrabook to trump tablets.

And if notebooks don't regain the interest of consumers? Acer may not break even in 2012 either. The larger theme on the Acer conference call---which followed a second quarter marked by inventory writedowns, layoffs, management turnover and a big loss---was that the company is betting on Windows 8, Intel and the ultrabook reference design.

Wang made it clear that the ultrabook was Acer's horse of choice in the mobile computing race. One truly odd thing about Wang's stance is that Acer keeps pumping out tablets.

Nevertheless, Acer's second quarter was a train wreck by any standards. The company reported a net loss of T$6.78 billion on sales of T$102 billion. In U.S. dollar terms, Acer lost $233.4 million on sales of $3.5 billion. Thomson Reuters had Acer losing T$4.63 billion on revenue of T$119 billion.

Ultrabooks are supposed to be the next generation of notebook computers. These pups will be faster, thinner and bring most laptops into a sleek form factor at a reasonable price.

The rub here is that ultrabooks will in some cases compete with tablets. The consumer has only so much expendable income. Acer is arguing that the ultrabook will trump the tablet over time. Wang's comments are more interesting when you consider that former CEO Gianfranco Lanci resigned because he thought Acer should be more aggressive with its tablet strategy.

Here's what Wang said:

We see notebook, netbook end user purchasing is getting back and we see the tablet is kind of flat. And I think the fever for the tablet is going down, and the notebook is regaining the interest of consumer. And also we have the new products of the ultrabook, will be started to ship some quantity in September and continually in fourth quarter. We see this is a new opportunity and a new mainstream trend is going to be started from fourth quarter this year.

This ultrabook is extremely thin and light, instant on, instant connected, with good Dolby sound, with good battery life, and attractive selling price. So that is a new trend which, in 20 to 30 years of PC history, nobody predicted or can believe at this time we can create this kind of Ultrabook. The 7 inch and 10 inch tablet continues selling but is kind of flat.

In context, Wang appears that he was talking about Acer's tablets. The overall trend is that tablets are growing at a much more rapid clip from a smaller base. For its part, Acer is planning to ship 2 million to 2.5 million tablets this year. Wang didn't seem to mention Apple or Android tablets specifically.

For Acer, its future rides with Windows 8 and ultrabooks. Check in a year and a few months from now to see if Wang's comments were on target or way off base.

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Topics: Hardware, Laptops, Mobility, Tablets

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29 comments
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  • Need both tablets and ultrabooks ...

    ... the former evidenced by the HP Touchpad firesale popularity ...<br><br>... and the latter by the Apple AIR purchasing frenzy by ZDNET bloggers (many of whom wanted to run Windows (applications)).
    jacksonjohn
    • RE: Acer CEO Wang bets on ultrabooks trump tablets: A prescient or nutty bet?

      @johnfenjackson@... Exactly. This isn't either/or because they are not used in the same way. Some people can't grasp that tablets are not a laptop or desktop replacement. They are a totally new category which fills a completely different need. Historically, people were trying to fill that specific need using a laptop or netbook and were disappointed. That's why those people grabbed iPads by the millions when they appeared. It filled a need which was not being met adequately by other devices. Can you use a laptop to sit on a couch, park bench, or lawn chair and use Internet services? Yes. Is it as convenient? No.

      Basically, Wang knows they can't compete in the tablet marketplace yet, so they are choosing to focus on ultrabooks. He's just trying to spin tablets as unimportant rather than admit he can't compete.

      Windows 8 may change his mind, if it works well on tablets. The big IF is whether those tablets will be more of the same $2000 tablets Windows has required in the past. If Windows 8 tablets cost significantly more than an iOS or Android tablets, they will flounder just like previous Windows tablets.
      BillDem
  • RE: Acer CEO Wang bets on ultrabooks trump tablets: A prescient or nutty bet?

    He is right, I bought an Air because of the size and weight as well as the convenience of carrying it. These were all the same reasons for buying the tablet.

    To me, the Air represents better egonomics, more power and good enough weight.
    slickjim
  • RE: Acer CEO Wang bets on ultrabooks trump tablets: A prescient or nutty bet?

    Well, I am sorry but ACER equals loser! Their products are garbage. Since 2002 I've purchased quite a few "so called cheaper" ACER products (computers, monitors). And I must say compared to other foreign brands (ie. Samsung, LG, ASUS, Toshiba, etc.), ACER is at the bottom of my rating. Their computer monitors are so so... but I've had a few ACER notebooks that barely lasted a year or 2. So they need to improve on their quality before betting on anything.

    That said... I'd like to see more ultrabook options. The current choices for tablets are ridiculous. They are a glorified web browser that is slow and nearly worthless. They can't handle flash products and cost too much!
    SpankyFrost
  • RE: Acer CEO Wang bets on ultrabooks trump tablets: A prescient or nutty bet?

    This time next year, this CEO won't even be a CEO anymore. He'll get is "golden" shower & disappear into "tech" oblivion! Damn! Why does getting tonnes of investors money (bonuses), right before you get canned called a "golden" shower?? Too ironic!
    SBMobile
    • RE: Acer CEO Wang bets on ultrabooks trump tablets: A prescient or nutty bet?

      @SBMobile, it's just a guess on my part, but I think the term you were looking for is "Golden Parachute" A quick Google or check on Wikipedia will confirm that.
      Dustoff6
      • RE: Acer CEO Wang bets on ultrabooks trump tablets: A prescient or nutty bet?

        @Dustoff6 HAHAHA! Golden Shower!
        slickjim
      • RE: Acer CEO Wang bets on ultrabooks trump tablets: A prescient or nutty bet?

        @Dustoff6 - You know, if more CEOs who performed poorly were given a Golden Shower as a parting gift instead of a Golden Parachute the world might just be a better place.
        rbgaynor
  • RE: Acer CEO Wang bets on ultrabooks trump tablets: A prescient or nutty bet?

    So he's basically saying laptops will sell more than tablets, which is probably true. All the Ultrabook is is the natural evolution of the Laptop.
    Aerowind
  • Won't be the first Wang to be Wrong

    Prescient or nutty? I think it's nutty.

    It seems that every company except Apple has to go through the stage of learning The Hard Way that tablet buyers are not seeking lighter and smaller computers. They already have computers. The tablet is something else entirely, with a different use case and different requirements (one of which is a kind of simplicity that is very difficult to achieve alongside full "computer" functionality.)

    Sure, there are people for whom ultrabooks and tablets will be substitutes, but the failure of the "little computers" to take a bite out of Apple in the tablet market tells me that ultrabooks and tablets will live different lives.

    Ultrabooks will compete mostly with other laptops. They will be the lighter, more portable, and unfortunately also more expensive choice. It might happen, but I don't foresee a lot of corporations paying extra to give their road warriors a two-pound advantage over the competitors' road warriors. I think the company-issue standard laptop will -- for price reasons -- continue to be the thicker, heavier models that can be manufactured with cheaper parts.

    That leaves the ultrabooks competing for mostly buy-it-yourself types who have the disposable income to enjoy the lightest, most portable laptops out there. Is that market bigger than the tablet market, such that Wang's prediction comes true? I don't see it.

    I admit that my hidden assumption here is that the ultra-thin parts required to manufacture ultrabooks will remain at a cost premium over the same functionality in thicker, heavier parts. I think that's a good bet.
    Robert Hahn
    • you assume too much

      @Robert Hahn I work for a major corporation and had a choice of a smaller lighter weight laptop when it was time to upgrade the older one. And I don't think this is the exception. The smaller laptops are not high priced like they used to be.
      Romas27
  • RE: Acer CEO Wang bets on ultrabooks trump tablets: A prescient or nutty bet?

    He is right, the tablet fad is dying down thank goodness. The ultrabook will allow you to do so much more and be more productive. Tablets will find their niche in a few specific industries but you won't see people carrying them around like they are the next must have device. The biggest factor for both the ultrabooks and tablets is going to be price.
    LoverockDavidson_-24231404894599612871915491754222
    • RE: Acer CEO Wang bets on ultrabooks trump tablets: A prescient or nutty bet?

      @LoverockDavidson_
      You and this guy are in denial as tablet sales are exploding and are growing much faster than the overall computing market. Ultrabooks and tablets have different use cases so should not be directly compared.
      Nathan A Smith
      • Not entirely correct...

        @Nathan A Smith

        I agree that comparing tablet and ultrabook markets is dangerous - but the evidence is clear that tablet sales are indeed slowing. There may be an upswing once the low price Android commodity tablets get going, but the high end market is approaching saturation.
        TheWerewolf
  • Why are tech bloggers unable to deal with two ideas at the same time?

    I'm glad they only give CEOs (unwanted and unlistened to)advice and don't actually run businesses...<br><br>"One truly odd thing about Wangs stance is that Acer keeps pumping out tablets."<br><br>It's not odd at all. Tablets are hot right now. You'd be an idiot not to get something into the market even if you don't think the market has long term endurance. And if you can pull it off, you might even own that market for the time it exists (like they did with netbooks... remember?)<br><br>But if they feel tablets are a short term thing - then making it clear that they will be the leader in the next big thing is also sensible. If they're right, then when that moment comes, people will say 'hey - he was right after all.'<br><br>Really, is this THAT difficult to parse out?
    TheWerewolf
  • RE: Acer CEO Wang bets on ultrabooks trump tablets: A prescient or nutty bet?

    I seem to remember that Asian manufacturers, especially the Japanese, felt that Americans didn't want small and light "sub-notebooks" and so rarely put their ultralight notebooks on sale in the US. The biggest exceptions were Sony, followed by Fujitsu with their "ultraportables," But to really see what was state of the art, you had to go to Dynamism.com, which specialized in Americanizing ultracompact notebooks normally unavailable in this country. I never quite understood how supposedly Americans wanted their notebooks to be about as powerful as desktops, hence lightweight, lower powered notebooks with better battery life need not apply.

    The first Mac Air was a good effort to change this perception, but I think more credit should go to the Asus Eee: compact, great battery life, and a great, great price point. That created the netbook market, and when Microsoft connived to get netbook makers to preload XP instead of Linux, then the market for lightweight, ultracompact notebooks really took off with mainstream users, with Apple claiming the high end with it's Air (and which itself benefited marketwise with Windows retrofits.)

    So I think this "Ultrabook" stuff is just some goofy relabeling of something that's been around for quite a while in some form of "ultra" version.
    JustCallMeBC
    • RE: Acer CEO Wang bets on ultrabooks trump tablets: A prescient or nutty bet?

      @JustCallMeBC I pretty much agree. I had a subnotebook back in the day, a Fujitsu P2010. This was great for my regular commute to Germany, but the issue with these was, you paid considerably more for a lower performance system. Same problem with most of the Windows tablets.

      The Asus Eee proved there's a market for small notebooks if the price matches the performance. The rise of ubiquitous networking also made the Eee and the Mac Air possible; in both cases, they're fairly well stripped of ports, and certainly removable storage.

      The rumor mill suggests the whole MacBook line is going "Air" this fall, but you can't bet that an Apple play necessarily works for everyone. And I also agree that "Ultrabook" is simply Intel's recipe for Air-like PCs that anyone can make.

      And while Apple's evidence that cute sells, it's not necessarily a win in the generic PC world. The cheapest Mac Air is around 3x the average price Americans are willing to pay for a PC. If Ultrabooks are priced in step with other PC, they may do well. Particularly if they only skimp on storage, not CPU power, they might see some upgrades from old clunky laptops. If they're priced to match the Mac Air, it's going to be HP Touchpad all over again. Other companies need to understand that Apple is a luxery brand, they probably are not.
      Hazydave
      • RE: Acer CEO Wang bets on ultrabooks trump tablets: A prescient or nutty bet?

        @dave@ I remembered the Fujitsu "Lifebook" series, but I couldn't remember what Sony's really compact model series was called, until just a few minutes ago: the "PictureBook." And when I looked it up to remind me how small it really was, I got a memory jolt about something I had completely forgotten about: the Transmeta Crusoe Processor. That was a pretty random chapter in CPU history....
        JustCallMeBC
  • Acer problems

    Acer's problems are about quality not type of notebook users want or anything about Tablets. People finally got tired of Acer flooding the market with cheap crappy performing notebooks and don't want anything to do with them. I had a Acer once and it was not terrible but it had a awful Touchpad with one large button for left/Right clicks. It was really cheap and not very good. Battery life was bad too. The point is don't make a bunch of cheap laptops to gain marketshare and expect to keep it. Fool me once shame on me. I won't be fooled again.
    jscott418-22447200638980614791982928182376
  • RE: Acer CEO Wang bets on ultrabooks trump tablets: A prescient or nutty bet?

    To me it boils down to expense. Tablets are likely to be (and should be) a success if priced properly. I qualify that by saying that Apple can get higher $$ for what they sell from SOME people, but for non-Ipad tablets to succeed price point is going to need to be around $300 (in my opinion). They are pretty much there now with a number of places running specials on Acer Iconia for $399 (and giving $100 store credit as an incentive). I just took advantage of that deal last week at Target. That price point was where I wanted it to be. Not going to pay $1000 for a laptop anymore (did that about 10 years ago when it was a different story), but I don't need that light of a full featured computer. $700 laptop will do me just fine (and the $300 I saved pays for the tablet or a phone).
    jkohut