Analysts: Acer-Gateway move puzzling

Taiwanese PC maker's decision to use Gateway--mostly known for consumer PCs--as a business brand in Europe "doesn't make sense", say analysts based in Asia.
Written by Vivian Yeo, Contributor

Acer's recent push into the business notebook segment in Europe through its Gateway brand, has drawn criticism from analysts based in Asia.

Bryan Ma, director of personal systems research at IDC Asia-Pacific, told ZDNet Asia in a phone interview that it was "not completely clear" why the move was taken, because regardless of the region, Gateway "is very much a consumer-centric brand".

Citing market figures, Ma noted that 85 percent of Gateway's shipments worldwide in 2008 were categorized as consumer. For Acer, 63 percent of global shipments belonged to this category. In contrast, only 24 percent of Lenovo's global shipments consisted of consumer PCs, while Hewlett-Packard had 44 percent.

"Our numbers suggest that Gateway tends to be very consumer-centric…Acer actually does have some penetration on the commercial side," he said, but relative to vendors such as Dell or Lenovo, Acer is still seen as a consumer brand.

Shaun Rein, managing director of China Market Research (CMR), also said Acer's push into the European market with Gateway "doesn't make sense". The company is simply "really poorly run", and it is not clear whether Acer's focus in the notebook segment is on style, lower price points, value in terms of functionalities, and what segment it is after, he explained.

"This is an example of a company that three or four years ago had a real good opportunity to [progress in the notebook space], and be a real value [proposition]--like Asus is now," said Rein. "But instead they kind of screwed up."

Another problem is that Acer amassed not just Gateway but also Packard Bell and eMachines through acquisitions over the last five years, with no clear direction of how it intends to work the brands to its advantage.

IDC's Ma said: "It's a very interesting situation--they've effectively got four brands that are all skewed toward the consumer space…four brands all lumped on one side of the spectrum.

"At the end of the day, they probably need to reposition some of those brands, especially if they are looking toward differentiating [each] and…more toward the commercial side," he noted.

In reality however, such a move may be a bit of an endeavor, Ma pointed out. "If they are spending money to rebuild these brand names it's just a question of how is that necessarily worth the investment it requires to build these brand names."

CMR's Rein added: "[Acer] spent too much time buying all these other brands, so they never really focused on brand building.

I'd throw out the Packard Bell [for instance], and focus on Acer and Gateway together but it costs a lot of money to do that," he said. "It's hard to push so many different brands--you are going to get confusion in the marketplace."

Lenovo, which bought over IBM's PC division in 2005, faced those issues and spent a lot of time trying to build both the ThinkPad and Lenovo lines over the last three years, he noted.

Milk consumer sales
Acer may do better focusing on the consumer market, as that's where the current PC growth is happening, said Rein.

"To sell to businesses, you need to spend a lot of money on building up the sales network and proving to businesses that you're going to be reliable on service and quality control," Rein pointed out. "And right now, Acer and Gateway just don't have that trust with businesses. According to him, corporate buyers would tap on HP, Dell or Lenovo's products.

And while Acer has "missed the boat" for tier 1 and 2 cities in China, Rein said there may be still pockets of opportunity in the third- and fourth-tier in the country. Within these cities, there are "a couple hundred million consumers who want to buy their first computer" and may be looking at foreign brands with competitive pricing. The spending outlook in these markets are also "more optimistic", he said.

After repeated attempts by ZDNet Asia to contact Acer's corporate office, a spokesperson declined comment in an e-mail.

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