Tue, Nov 25, 2003 page10

• Acer comes up with the goods

  DIVERSIFICATION The company 's Value Research Laboratory has helped Acer stay focused on the consumer and reduced its dependence on traditional products

  • By Bill Heaney / STAFF REPORTER
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  Acer Inc, Taiwan's only globally recognized computer brand, has successfully created a range of consumer-friendly products to reduce its dependence on pure computer hardware sales, the company's chairman and chief executive officer, Stan Shih (施振榮), said at the company's research complex in Taoyuan County yesterday.

  "We changed from a technology-centric to a customer-centric culture, or mind-set," Shih said. "We carried out comprehensive research on customer needs, and this is the result."

  In the past 12 months Acer's new Value Research Laboratory developed 13 hardware, software and service products, which Shih showcased to the press yesterday.

  The products underscore a turnaround in Acer's fortunes since the formerly debt-ridden giant spun off non-core business units and returned to profit last May.

  "In 2000, Acer came up with a new strategy and went through a mega-transformation to reposition itself as a business integrator," Shih said. "It took only one and a half years to turn around."

  Acer needs to create more products to reduce its reliance on pure computer products, he said.

  "Acer still relies heavily on PC-related products -- notebooks account for a large proportion of sales," said Ben Lee (李柏顏), head of research at Nomura Securities in Taipei. "Diversification through the development of new products is very important for the company's future."

  This year, notebooks are expected to account for 58 percent of Acer's sales, and desktop PCs for 30 percent, Jim Wong (翁建仁), president of Acer's IT products business group, said yesterday.

  "Our new digital home products will add revenues from the second half of next year, and will go very big by 2005," he said.

  The policy seems to be paying off. The 165 engineers at Acer's Value Research Laboratory have gained 50 patents this year, or 10 more than originally targeted. Acer has allocated 1.5 percent of revenue to the research lab, which works out to US$500 million this year, rising to US$675 million next year on current forecasts.

  Products developed so far include a range of home-based devices -- a handheld organizer, a slim set-top box, a radio, a tablet computer and a notebook computer -- that communicate with a central personal computer and large flat-screen television wirelessly so that users can view photo albums, personal video files, movies, travel or weather information, or listen to music files anywhere in the home.

  Other companies are able to offer the same products, but Acer has stamped its own mark on them by developing new software and services, Shih said.

  One example is the speech-recognition software that allows you to change channels by talking into your handheld organizer, and another is the "Just-in-Time" instant e-mail service, which lets your friends and colleagues know which device you are working on -- your mobile phone, handheld, notebook or desktop -- so that they can choose how to contact you and what information they can send.

  For businesses, Acer has developed music and magazine download Web sites, and security alerts that warn a company's key employees if computers have been attacked by viruses or disconnected from the Internet.

  Acer has announced it expects to break the US$10 billion sales barrier in 2006, with US$3.3 billion expected this year.

  "So far this year, Acer has seen a substantial improvement in terms of profit and loss, that's true," Nomura's Lee said. "But the company still ranks seventh or eighth as a global PC player. To move into the top five, it has to increase its market share."

  The new digital products are central to Acer's growth strategy, Shih said, predicting that between one half to two thirds of all Acer products will include the new digital technologies by 2006.
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