Mon, Jun 24, 2013 - Page 14 News List

ANALYSIS: Acer needs to change its strategy, analysts say

By Helen Ku  /  Staff reporter

In a post-PC era in which mobile devices appear to have become more popular than traditional computers, companies in the technology industry have worked hard to develop new strategies, but Acer Inc (宏碁) appears nostalgic, rather than decisive, analysts say.

In the company’s annual general meeting on Wednesday, Acer chairman and chief executive Wang Jeng-tang (王振堂) apologized to shareholders for failing to lift the company’s shares, saying that the company is confronting the aftermath of an “earthquake” or “tsunami” in the PC industry triggered by Apple Inc.

Even so, Acer, the world’s fourth-largest PC maker, still has faith in PCs, because consumers are still anticipating better desktops or laptops that can meet their needs, Wang told shareholders.

“Traditional PCs remain irreplaceable by any gadget yet because they can provide higher productivity. We plan not to retreat from the desktop and laptop markets, despite the rise of smartphones and tablets,” Wang said.

“Acer’s good days are coming,” said the 59-year-old Wang, who has been at the company for 32 years.

Wang’s remarks sounded a bit too optimistic about PC demand, despite the strong demand for smartphones and tablets.

Last month, the US-based research firm International Data Corp (IDC) said that global PC shipments are expected to drop 7.8 percent this year from last year, much higher than its original estimate of a 1.3 percent decline.

Wang also said the company remains confident in Microsoft Corp’s efforts to revitalize the PC market, citing the US software giant’s increasing attention on business partners’ and consumer reaction over Windows 8.

“While Microsoft is also trying hard to survive from shocks, Acer has no choice but to keep following in Microsoft’s footsteps and roll out more notebooks and desktops running on the Windows 8 operating system, which has been little help, as it turns out,” Fubon Securities Co (富邦證券) analyst Arthur Liao (廖顯毅) said.

“Acer needs to hire more software engineers for its research and development unit, and the firm’s priority should be writing code for Google Inc’s Android mobile operating system, which powers tablets and smartphones,” Liao said.

Investors echoed Liao’s views and sent Acer’s shares to a record low of NT$21.6 on Friday.

“It’s time for Acer to change its mindset,” Liao said.

Major players in the global tech industry have been looking for game-changing products after the launch of Apple’s iPhones and iPads. However, little progress has been made, except for Google Glass, which is still under development.

Against this backdrop, both Hewlett-Packard Co and Dell Inc, the world’s first and third-largest PC maker, have shifted focus to servers, rather than PCs, while Asustek Computer Inc (華碩), the world’s fifth-largest PC makers, has extended its business to not only tablets, but also smartphones.

Liao said PC companies must not ignore emerging markets’ strong sales growth potential and economies of scale in those markets, despite the continual fall in prices of smartphones and tablets.

“Even Lenovo Group Ltd (聯想), the world’s second-largest PC maker, is selling smartphones along with other Chinese smartphone vendors, such as Huawei Technologies Co Ltd (華為) and ZTE Corp (中興),” Liao said, adding that Acer has not moved fast enough on smartphones.

Acer’s recent launch of the 5.7-inch phablet, Liquid S1, stands out from other Android-based phablet products, but it should reconsider its partnership with Microsoft and work instead with Google to develop Android-based mobile devices or Chromebooks, he said.

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