Acer Finding Its Bearings After Management, Product Issues

Acer lost its direction in the past few years amid management, product and supply chain issues, but the company is working its way to get back on track, company president Jim Wong said.

"In the last three or four years, we lost focus," Wong said during an interview at the Computex trade show in Taipei. The old management team started to talk about market share and in the process lost focus on innovating and solving customer problems.

"We want to go back to the old days" and talk about products, Wong said. "Gradually we are coming back because our organization is stabilizing."

Acer peaked as the world's second-largest PC maker in 2010 and early 2011, but has been losing market share to rivals Lenovo and Dell since. Acer's market position tumbled after a slowdown in sales of netbooks, a market ruled by Acer.

A management shakeup in March last year resulted in the outing of Gianfranco Lanci as the company's CEO, triggered by a difference of opinion on how aggressively Acer should shift its focus from consumer PCs and pursue mobile devices. The company has also been dogged with supply chain issues such as mismanagement of inventory in the Europe, Middle East and Africa distribution channel.

The netbook sold well early on, but slowed down as it did not fulfill its promise as a mobile Internet device, Wong said.

"It turned out to be a miniaturization of a notebook," Wong said.

Netbook sales started slumping just around the time Apple's iPad was introduced. The iPad impacted PC makers as people gravitated toward tablets, slowing down overall PC sales. Innovation in PCs came to a standstill, and Wong said the company recognized that changes were needed to survive and evolve with the changing computing landscape.

"It's not healthy, nobody can survive this way," Wong said.

Acer is now backing ultrabooks and tablets running Microsoft's upcoming Windows 8 operating system. With its touch capabilities Windows 8 and ultrabooks could potentially provide a new way to bring innovation back to the PC era, Wong said.

Acer's tablets have not sold well so far, but the company hopes users are attracted to ultrabooks with the ability to create and consume content. The company has announced ultrabooks with Intel's chips, and hopes to launch new Windows RT devices with ARM processors in the first quarter next year.

Acer's traditional rivals including Hewlett-Packard, Dell and Lenovo have already announced ultrabooks with Windows 8. But Wong questioned HP's and Dell's commitment to the PC sector, saying their business preferences lie somewhere outside PCs. For Acer, the PC business is its core business, and the company doesn't fear competition. HP and Dell are focusing more on the enterprise, with PCs being a secondary business.

"Competition is the way to make users happy because everybody is trying to be innovative," Wong said.

Acer has not turned away focus from alternative operating systems such as Android and Chrome OS, which the company offers on netbooks and tablets. The lightweight operating systems are good for data access in the cloud, and the company will keep its eyes open for opportunities around the OSes.

And despite a slowdown in sales, netbooks still have some value as secondary, low-cost devices. The company isn't giving up on the product quite yet.

"We try to continuously look into these things," Wong said.

Agam Shah covers PCs, tablets, servers, chips and semiconductors for IDG News Service. Follow Agam on Twitter at @agamsh. Agam's e-mail address is agam_shah@idg.com

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