Print 25 comment(s) - last by mavricxx.. on Apr 4 at 4:53 PM

Will focus on increased profit margins instead of sales volumes

Now that Gianfranco Lanci is no longer the CEO and President of Acer Inc., the company can follow the vision of its board of directors -- by being more like Apple and HTC. 

Lanci's goal -- and, by extension, Acer's -- in the past was to sell more laptops than anyone else, including Hewlett Packard. Despite some successes, the strategy wasn't working for Acer's bottom line, with the company facing its second straight losing quarter. 

The rift in ideology caused Lanci to resign abruptly yesterday. According to Bloomberg BusinessWeek, Acer will name a new president -- one with experience in smartphones and tablets -- later this month. Company chairman, J.T. Wang, will fill the spot in the interim.

"For Acer, and other PC makers in general, the way to create value is to innovate and find new markets and opportunities, and that’s a big challenge," Simon Ye, a Gartner analyst, told Bloomberg. "Acer’s problem is that it is commonly perceived as a brand that competes on price, and that doesn’t help profitability." 

Acer's focus going forward is to maximize profitability instead of sheer sales volumes, spokesman Henry Wang told Bloomberg. This will require, among other things, an increase in spending on research and development.

Apple's business model is certainly one the Taiwanese company will be looking to emulate. According to Bloomberg, the iPad maker had a 21.5 percent profit margin in its last fiscal year, while Acer had a mere 2.3 percent. 

One major focus of the future is the tablet market, which has proven its worth over the last few quarters in particular. "There is good consensus among the board members that the tablet is the way to go," Acer CFO Tu Che-min told Bloomberg.

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But who will sell...
By piroroadkill on 4/1/2011 8:21:34 AM , Rating: 2
Cheap tat?

Acer is a budget brand, and I very much doubt they can turn that image around, and infact, they shouldn't - there is definitely room for a budget manufacturer.

RE: But who will sell...
By Hiawa23 on 4/1/2011 9:12:34 AM , Rating: 2
nothing wrong with being a budget brand, but they have to make money & if they can't then something needs to change.

RE: But who will sell...
By Boze on 4/1/2011 12:16:07 PM , Rating: 2
20 years ago Samsung was a budget brand.

Now they're one of, if not the, highest quality brand of television in the world.

It can be done.

Nintendo used to make playing cards...

RE: But who will sell...
By lawrance on 4/1/2011 3:13:15 PM , Rating: 4
Another South Korean brand who turned things around is Hyundai / Kia... For decades they were to the go-to brands to cite inferior products. They are now making some really good products that are actually starting to compete with the worlds best Japanese brands. If they keep this pace up, Hyundai will be used in the same sentence as Lexus in less than a decade. Pretty impressive turnaround for any company.

RE: But who will sell...
By Windogg on 4/1/2011 6:51:23 PM , Rating: 2
LG as well. Back when they were Goldstar, all of their stuff was junk. Today they make pretty darn good products.

RE: But who will sell...
By Azethoth on 4/2/2011 2:50:57 PM , Rating: 1
"Nintendo used to make playing cards..."

Yeah man, Wizards of the Coast should start shipping consoles!

RE: But who will sell...
By shortylickens on 4/3/2011 10:38:13 AM , Rating: 2
Agreed. I like them better as the little guy who makes basic stuff. I love my cheap netbook, no way in hell I'd pay extra just cuz they put it in a pretty case.

And if its just profit margins they are worried about, they should not try to compete with Apple. They dont have an exclusive desktop & mobile OS. Theres nothing for them to compete with. Unless they make their own Linux Distro.

Abou time
By Commodus on 4/1/2011 8:40:35 AM , Rating: 5
In many ways, Acer has embodied what's wrong with the Windows PC market: that race to the bottom for price that hurts quality and kills originality. All about superficially big numbers to lure someone in for that Best Buy special and to push market share.

I've been following Acer's reactions for the past year, and it's been hilarious: each quarter it keeps insisting the iPad is a short-term fad, and everyone will "come to their senses" Any Day Now to just keep buying netbooks for all eternity. Then the iPad steals some more market share, and they repeat the claims Apple will go away.

"Head in the sand" is not a viable competitive strategy.

RE: Abou time
By spread on 4/1/11, Rating: 0
RE: Abou time
By KoolAidMan1 on 4/1/2011 11:36:56 PM , Rating: 2
Nailed it. I'd rate your post higher if I could but it is already a 5. :)

RE: Abou time
By Strunf on 4/4/2011 8:14:44 AM , Rating: 2
There's nothing wrong with packing more value into a product, actually the strength of the PC its exactly that. The price of a brand PC (desktop) shouldn't be much higher than the sum of it's components, this difference comes from the value you put into support and design, besides that all PCs are pretty much the same.

I've been building PC for some time and I never found them any less stable than brand PC for 1/3 of its price, today however we can find some nice cheap brand PC so building your own PC doesn't save you that much money anymore. I don't see why people would spend more money to buy an Acer, even SONY and other brand now build more affordable PCs cause they know there's money to be made on this segment too.

Don't compare Acer with Apple, Apple could sell its stuff for 4x or 5x the price it costs them to make and people would still buy it, when you want a Apple product you will pay whatever Apple asks for it, now a PC ?...

It's all in the marketing
By xprojected on 4/1/2011 12:31:08 PM , Rating: 3
First, they need to create a new brand to eliminate any reputation/notions of Acer. Then, they need a Steve Jobs/Willy Wonka-ish figure who runs press events to introduce "magical" new products. They cannot mention competition, because they'll need to act like there is none. Forget a range of products, they'll need to focus on as few as possible, and defend them to the end. They should create limited supply, so that they can report them "sold out" due to overwhelming demand. They need to put them in the hands of celebrities, performers, and the trendy, to increase the "cool" factor. That should all help them toward their goals.

RE: It's all in the marketing
By KoolAidMan1 on 4/1/2011 11:34:35 PM , Rating: 3
Not making cheap, low quality, flimsy products would also help

who doesn't ?
By mforce on 4/1/2011 9:20:30 AM , Rating: 2
I think pretty much any company wants to be Apple and sell products at a premium price.
The thing is though, they really aren't Apple so they should try to do the best they can with what they've go and stop daydreaming.
HP is also trying to be Apple with their own WebOS and all but I'm not so sure they will succeed.
What I am sure though is that Acer won't be anything like Apple anytime soon.

RE: who doesn't ?
By spread on 4/1/2011 10:01:18 AM , Rating: 2
Apple might be a lot of things but they do offer quality feeling hardware for the money. Nice aluminum cases, great keyboards, higher quality screens in their products now with the IPS craze. Overall, they're products feel and look great like a luxury product should.

Meanwhile Acer is still trying to sell crappy plastic cases that creak with washed out screens.... for a premium?? I haven't seen any of their products that advance into Apple territory.

April Fools
By FaceMaster on 4/1/2011 8:15:51 AM , Rating: 2

By Ticholo on 4/1/2011 9:28:13 AM , Rating: 2
April's fools, for, against, whatever!
This was worth it just for the picture of the apple stuck to the laptop!

By TimberJon on 4/1/2011 9:44:42 AM , Rating: 2
The tablet market is the way to go? no. Innovative technologies is the way to go. Not a re-hash of something that is already well established in the market. I don't believe a product in the phone, digi music player or tablet markets will be ousting Apple's selections for a long time. They grabbed the horns early and have the upper hand by a long stretch. I'm not an Apple zealot, but I know biz.

A) I don't believe they could hock nearly as much as Apple has on R&D to catch up since they are on V.2 of it's iPad.
B) User feedback. All the feedback for all generations of the iPhone and iTouch helped in the development of the iPad we have today. Acer can't match that.
C) Even if Acer built upon this foundation that Apple has built, I don't know if they could drop profit bombs. They couldn't price such a tablet higher, so they would need to price it a bit lower. But at the same time they would need to somehow convince everyone considering an iPad that theirs is better and market it like hell. While I don't see that happening, I'll say anything is possible. With the right focus, and drastic internal changes, they might be able to turn the image around.
D) Support. enough said.

By GeekWithFire on 4/1/2011 11:43:18 AM , Rating: 2
No problem. All they need to do is raise their prices, over hype their "new" products, and find a way to get the news outlets and blogosphere to kiss their butt.

By invidious on 4/1/2011 12:52:17 PM , Rating: 2
They are bleeding cash and they want to be more like one of the more profitable tech corporations in the world? Who could have figured that?

Unfortunately for Acer there really isn't room for more than one "Apple" in the market. So unless they think they can beat Apple at their own game it would probably be wiser to try to be like one of the more conservative business model tech corporations.

Let' see now...
By frobizzle on 4/1/2011 1:28:24 PM , Rating: 2
Crappy products? Check

The world's worst customer service? Check

Overpriced garbage? Need to work on that one.

Looks like Acer is already on the right path to be another Apple. All they need now is to get a good supplier of magic pixie dust and it's a slam dunk!

Not Acer
By Etern205 on 4/1/2011 2:57:01 PM , Rating: 2
The pic with the apple tape to the laptop isn't a Acer. It's design looks more like an HP (one of their old models).

By Ammohunt on 4/1/2011 2:57:38 PM , Rating: 2
For counsumer its about value i.e. "Did i get a quality product for the money i spent?" stick to that and they will increase profits through demand. Even apple doesn't get that.

Try plums!
By magneticfield on 4/4/2011 3:23:47 AM , Rating: 2
There can only be one fruit company!

It's in the human psychology, we tend to chose one path for everything we do.
There is no way in hell an Apple fan will give it up and go Acer, no way an Apple hater would buy Apple, an by no means an undecided customer will decide to pay more for an Acer product rather than Apple.

There simply is no room for another phenomenon like Apple. It would have happened already since long ago, it doesn't take a bunch of disappointed dreaming board directors to start such thing. It takes that which unfortunately won't happen any time soon.

</Apple-praising rant>

Acer's Problem...
By mavricxx on 4/4/2011 4:53:53 PM , Rating: 2
The problem I see from an outside perspective is their advertising strategy. I NEVER see an Acer commercial, I go to a Best Buy, an AAFES or any other electronics store and they rarely have Acers or any that fit what I'm looking for. Lastly, you guys keep saying they are a budget comapany and usually the HP's are the most affordable and most appealing because they have so many different models to choose from. Overall, what I'm trying to say is- ACER NEEDS TO ADVERTISE ALOT MORE!

"When an individual makes a copy of a song for himself, I suppose we can say he stole a song." -- Sony BMG attorney Jennifer Pariser

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