Acer buys iGware, enters cloud space

Taiwanese PC maker looks to supplement PC business with cloud services after announcing acquisition of U.S. cloud vendor iGware in US$320 million deal, with further US$75 million payout depending on performance.
Written by Kevin Kwang, Contributor

Acer is looking to diversify from its core PC business and augment its portfolio with cloud computing services with its acquisition of cloud vendor, iGware, in a US$320 million deal announced Thursday.

According to Reuters, the world's No. 2 PC maker is looking to move into the potentially lucrative cloud market and supplement its main hardware business with the acquisition, which includes a further US$75 million performance-based fee.

Silicon Valley-based iGware offers cloud software and infrastructure tools that support more than 100 million consumer devices worldwide including Nintendo game consoles.

"An ICT company without cloud-based technology will have difficulty in enhancing its company value," Acer said in the report.

Company spokesperson Henry Wang added that the PC maker will start integrating iGware's technologies into its cloud software and platform after the deal is finalized in late-September. It is also looking to launch an Acer cloud product some time in 2012, Wang noted.

Gartner analyst Tracy Tsai lauded the acquisition, telling Reuters that the deal is the "right direction" for Acer. "Companies can no longer rely on hardware; they have to bring new values to customers through providing applications and software services and, by that, to increase their [profit] margin."

The announcement comes as the Taiwanese company tries to recover from the departure of former CEO Gianfranco Lanci in March this year, following disputes over business strategies with the board of directors, and a series of cuts to its shipment forecasts.

Last month, ZDNet Asia's sister site, CNET News, reported that the Taiwanese manufacturer reduced its notebook shipment forecast from 6.4 million to 5.4 million units, with many of the reduced models comprising netbooks. In a separate CNET News report, the company's chairman, J.T. Wang, admitted that the company misjudged the number of Iconia Tab touchscreen tablet devices it would sell this year and reduced its projections by 60 percent.

Nintendo collaboration brewing
A subsequent Reuters report on Thursday also indicated that Acer was in talks with Japanese games company Nintendo about a potential partnership.

Wang told the news wire that Nintendo was supportive of the deal and would pay Acer US$20 million to US$30 million service fee every year after the completion of the iGWare acquisition.

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