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

Acer's CEO says that the ultrabook will trump tablet demand, which is seeing the consumer fever die down. Is he right or delusional?
Written by Larry Dignan, Contributor

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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