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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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What?
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.




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