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Company hopes that ultrabooks are the answer to its sales woes

Taiwan's Acer Inc. (TPE:2353) is sick and tired of making "cheap" products.  It lusts for the kind sleek designs that highly profitable American computermaker Apple, Inc. (AAPL) produces.

Acer CEO J.T. Wang was blunt when he remarked, "We will shift our strategy to improving profitability from pursuing market share blindly with cheap and unprofitable products."

The candid rhetoric is a sharp departure from that of company founder Stan Shih who in 2010 fielded such wild opinions as stating that Acer's products were so cheap they would put Dell, Inc. (DELL) and Hewlett-Packard Comp. (HPQ) out of business in 20 years and that Apple was a "mutant virus" that would go the way of "Betamax".  At the time Acer had just stolen the number two spot in global sales from Dell.

However, since then it's been all downhill for the firm.  It began to post losses, its CEO was forced to resign, and suddenly "cheap" was perceived in a whole new light.  Suddenly Acer began to aspire to be more like Apple -- a premium vendor with large margins.

In 2011, the situation has progressively deteriorated for Acer, despite its change in attitude.  Tablet sales passed netbook sales -- Acer's traditional sales driver.  Acer had prepared for this launching an Android tablet, but this first crack at the tablet market proved a relative flop, forcing it to cut sales estimates almost in half.

Recent estimates on global PC sales show Acer shedding nearly 20 percent of its U.S. and 10 percent of its global market share, falling to fifth place in the U.S. and fourth place globally in PC sales (excluding tablets).

Acer feels that by focusing on good battery life, a thin design, and light weight it will be able to return to sales success.  The culmination of all those characteristics is "ultrabook" a class of PCs first introduced by HP's "Envy" and Apple's MacBook Air luxury designs back in 2008.  Officially the term "ultrabook" comes from chipmaker Intel Corp. (INTC) and has a strict set of hardware quality requirements for use.  

Mr. Wang comments, "Selling more ultrabooks will also help improve our profit margins as they command higher prices."

Acer's first ultrabook, the Aspire S3-951, went on sale on Oct. 10, 2011.  The 13-inch design is remarkably similar in look to the MacBook Air, complete with a thin metal shell case.  It's currently retailing for as low as $870 USD from, Inc. (AMZN), compared $1,290 USD for the cheapest 13-inch MacBook Air.
Acer Aspire S3-951

If all goes according to plan, Acer hopes to halt the losses and grow 10 percent in 2012.  But to do that, it argues, it must stop selling "cheap" junk.

Source: WSJ

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Another Brand
By Flunk on 12/8/2011 4:04:41 PM , Rating: 5
They need a new premium brand. Reforming Acer into a premium brand is much more work than releasing their new high end systems as a new brand.

I would buy an HP Envy notebook but it would take a lot to convince me that Acer is capable of making a premium quality notebook so I wouldn't buy one even if they made one.

Acer = cheap junk and it's going to take a lot to change the perception.

RE: Another Brand
By kensiko on 12/8/2011 4:10:24 PM , Rating: 2
Totally agree with you.

I got a Gateway laptop, made from Acer too, but since it's not the same brand, I supposed it could be better. And after all, it is a very good laptop. Maybe an equivalent Acer laptop would be good too, but the reputation is made so it's too late.

RE: Another Brand
By Spikesoldier on 12/8/2011 4:17:00 PM , Rating: 3
actually during my tenure at acer, their strategy was to position gateway/emachines lower than the acer brand, in that order.

1. acer
2. gateway
3. emachines

RE: Another Brand
By Mitch101 on 12/8/2011 5:46:39 PM , Rating: 4
Ive known Acer from way back when pushing in the power button would bend the case and you had to open the case and re bend it.

For me Acer today is a premium brand compared to what they used to be and like you say gateway/emachines are their lower end. I personally find they make the right choices in a lot of overlooked areas and get a bad rap.

To compare Lenovo make a pretty solid machine in feel but my Acer laptop runs cooler and has outlived two corporate laptops and that just a two year time span. Acer is doing something right its just when you touch the Acer it feels like its going to break or its a little thin but it keeps going. I dont doubt the inside they just need to put something more into the look and feel. A little thicker plastic could change many peoples minds about what they are making.

RE: Another Brand
By StevoLincolnite on 12/8/2011 6:05:04 PM , Rating: 2
Ive known Acer from way back when pushing in the power button would bend the case and you had to open the case and re bend it.

My first Notebook I got back in 2003 which had a Mobility Radeon 9600, 1.6ghz Pentium M, 2gb of ram and a 120gb Hard Drive.

Just happened to be an Acer.
Heck I could even run games like Oblivion on it with some modding of course.
It went everywhere. Work was mostly labour-outdoors stuff to keep track of inventory and geography and it hummed along in the rain, wind and shine till even this day.

Sure it's a little warn, the ports have a little rust and the CCFL backlight is about as dim as some people I know, it's been dropped, sat on and crap spilled all over it...

If what you say is true, that the older Acer laptops were crap, then I might jump on a newie if they can survive what I have put this thing through.

RE: Another Brand
By mrbios on 12/8/2011 8:37:31 PM , Rating: 2
I bought the laptop you're talking about, used, for my niece about 3 years ago. It's currently running Windows 7 quite nicely actually. At first it had some issues with the BIOS being incompatible with the newer Vista/7 power management (there'd be no battery meter), but some Google searching led me to a modified, unofficial BIOS that fixed this.

The battery had to be changed, and probably will need to again soon, and had a couple power adapters die, but she's still running well. It's also taken a bit of a beating as well, and just won't die. Since Windows 8 is supposed to have equivalent or less requirements, I'm sure she still has a few more years of use left in her.

RE: Another Brand
By Ytsejamer1 on 12/8/2011 9:42:02 PM , Rating: 2
I don't know...I can't stand HP hardware and by default, will never touch buy a Dell. I did enjoy servicing the Dell laptops though...they were pretty decently designed for breaking down and putting back together.

I've recommended Acer to friends and family and they haven't had any problems. They always seem to have solid features, use solid hardware, and overall just work pretty well.

Their tablet was underwhelming but most of the HoneyComb tablets were all the for a wallpaper, couple of apps, etc.

I hope they stick around...i like the design of their stuff.

RE: Another Brand
By Solandri on 12/9/2011 2:11:35 PM , Rating: 2
Most of the big name laptop manufacturers don't actually make the laptops they sell. They buy them from OEMs (or ODMs as they're called in this market niche, since they also do the designing, not just the manufacturing*). Then they slap their name on it before selling it to you. Most of HP's laptops are made by Quanta. Quanta also makes the Macbook/Pro and current gen Air. (Indeed, the unibody aluminum frame of the Macbooks was Quanta's innovation, not Apple's. Asus made the Macbooks prior to about 2008; I think they made the original.) So most of the HP laptops were designed and built by the same people as the Apple laptops.

Asus is the only laptop company I know who makes all their own stuff. Not surprising since they started off as an ODM (they've since spun off their ODM branch into a subsidiary - Pegatron). IBM used to make its own too, but Lenovo has farmed out a lot of its manufacturing. That's not to say other companies don't make their own laptops - the Sony Z is designed by Sony in Japan and (initially) manufactured in Japan. But the vast majority of their other laptops (and pretty much all major brand laptops, including Apple) are made by ODMs.

Bottom line is, you can't really judge a notebook by its brand name. Maybe Quanta makes better laptops than Compal. But some of Dell's and Toshiba's models are made by Quanta, while some of their other models are made by Compal. And there's no easy way to tell which model is made by which ODM. About the only thing the brand name is good for predicting is the level of aftermarket support you'll get.

RE: Another Brand
By Rukkian on 12/9/2011 3:50:23 PM , Rating: 2
While I do agree with most of what you say, there is a difference in what the retailer (Dell, HP, Apple, etc) offer, even from the same ODM. You can have 2 different laptops from the same ODM and have them still be quite a bit different in quality due to the options that got selected during the design phase. Each brand has a certain look and feel that they are going for.

RE: Another Brand
By melgross on 12/11/2011 6:42:39 PM , Rating: 2
Nuts! Quanta doesn't design anything for Apple, and they didn't design the aluminum cases either. I know some people just don't want to give Apple credit for anything, but seriously...

And Quanta isn't the only manufacturer of Apple's notebooks. And they don't always make them. Apple has several suppliers. Apple even often buys the equipment for some of these manufacturers.

There are different quality levels. Companies even spec the individual parts used. Quants is just an assembler.

RE: Another Brand
By TheRequiem on 12/8/2011 6:36:24 PM , Rating: 2
I'm not sure about this, look at how bad Apple's reputation was before they came back making premium products. I for one, think Acer has a nice kick to it's name. I think if they dramatically revamped their lineup, it's possible they could re-design their brand name. Many companies have done this. Look at Sprint, as little as three years ago, they were looked at as the worst mobile company in the U.S. and now they three years later, they've been taunting Verizon's customer service daily and with a new network in the works, it looks liek their brand is becoming a higher value. Not impossible.

RE: Another Brand
By rbuszka on 12/9/2011 1:33:23 PM , Rating: 2
The problem is that the corporate culture at Acer is wildly different from Apple and is more like the mundane PC makers like HP and Dell. You don't have a person at the top making design decisions and pouring his personal passion into every decision. Instead you've got a bunch of MBAs with no knowledge of the customer's desires (because that's for the little people to focus on), and they only focus on profitability through volume and cost-cutting, so you've got a recipe for falling deeper into unfocused confusion and a race to the bottom of the quality totem pole, not a more coherent brand. To build a high-end brand, you can't cheapen it one iota with 'low-end' products. If the customer's brand recognition of Acer isn't focused on high-end products, they will look for a brand with a more visible high-end focus (like Apple).

Sadly, I see Apple going this route more and more already as Steve Jobs has been gone, because he had passion and leadership abilities. I don't think Tim Cook will be able to lead as effectively as Steve Jobs, and while he may have passion and design sense, he won't have the 'my way or the highway' attitude that Steve brought to his management style, and his input will eventually be overwhelmed by the cacaphony of MBAs and gradually silenced, rather than being the dominant voice. I honestly believe the iPhone 4S will be the last 'insanely great' Apple product, and the company will gradually squander its reputation on increasingly mediocre products until the company eventually fails. At the first sign of a downward trend in Apple stock, sell your shares. It will be a race to get out.

RE: Another Brand
By zodiacfml on 12/9/2011 9:50:08 AM , Rating: 2
bad experiences with Acer, more likely caused by cost cutting (cheap) to produce cheaper devices compared to competition.

RE: Another Brand
By Da W on 12/9/2011 1:42:08 PM , Rating: 3
It takes more than brand and design. What if every body makes aluminium unibody PC? You're just one of the others.

Apple actually makes its OS, create new design instead of copying and actually are the first to market new generations of products. Acer would have to do all that if it wants to sell at premium.

RE: Another Brand
By Spikesoldier on 12/8/2011 4:13:29 PM , Rating: 2

take a page from the japanese auto manufacturers who were tired of their low-cost leadership and make a premium brand to counter the stigma low-cost leadership brings when you make things too junky.

the race to the bottom has already been reached. weve seen HP fold its PC biz, now acer has to differentiate themselves to remain in business.

acer attempted to bolster its image in NA by purchasing gateway/emachines but i believe they have bastardized those names even further and drug it down acer's level.

RE: Another Brand
By bigdawg1988 on 12/8/2011 4:48:54 PM , Rating: 1
Actually the problem is that PCs are not really designed the same way as automobiles. PC makers are really just assemblers of other peoples' components. Heck, I can assemble a PC better than they can, but they usually get a lower price due to larger buying power. However, I would have one hell of a time trying to assemble an Accord/Camry.

Acer is going to have to figure out how to sell the heck out of their cheap computers like Steve Jobs, or come up with some NEW designs, and not try to sell over-priced Apple knockoffs. Much easier said than done, or all of the other PC makers would have done it by now.

RE: Another Brand
By Cheesew1z69 on 12/8/2011 4:55:27 PM , Rating: 3
And you think the car makers make all their own parts?

RE: Another Brand
By VoodooChicken on 12/8/2011 5:36:27 PM , Rating: 3
Well, certainly not the brake pads.

RE: Another Brand
By bigdawg1988 on 12/8/2011 7:35:52 PM , Rating: 1
And you think the car makers make all their own parts?

No, but they design and make a heck of a lot more of a car than PC makers do with computers. They also do a much better job designing car parts in the first place. A lot of car makers make their own engines and bodies. What do most of the PC makers like Acer actually make, or even design? The cases? The motherboards, maybe. Not too much else. PCs are almost a commodity, and most of the components actually are, especially on the low end. Totally different approach compared to car building.

Look at all the comments about Acer computers; not a lot about hard drive failures and bad CPUs (which they do not design), there are complaints about the cases and keyboards (which they do design, or at least spec).

RE: Another Brand
By TakinYourPoints on 12/8/2011 6:35:29 PM , Rating: 2
You're right, nothing but a rebranding will change that perception. They need to spin off a different name like when Toyota made the Lexus brand in the late 80s so they could enter the luxury car market.

It is one thing to make a quality product, it is another to associate yourself with one. Nobody in their right mind believes Acer is anything but trash, so a rebranding is in order if they want to sell quality laptops.

They obviously need to focus on fit and finish and actual build quality, not just say they want to charge more. Aside from Apple, Lenovo is the only other company I really trust in terms of making a quality laptop.

Make a quality machine and people will pay for it, simple. Good screen, good keyboard, good trackpad. Make a point that there is no preinstalled bloatware and people will really like it.

RE: Another Brand
By danjw1 on 12/8/2011 11:29:53 PM , Rating: 1
I wouldn't touch a computer from HP, Acer or Dell. They are all full of spamware. If they can get away from having rep for giving you a bunch of junk you don't want with a system; They would do more for themselves then just putting a new name on it.

RE: Another Brand
By Warren21 on 12/9/2011 4:58:03 AM , Rating: 1
Because it's so labour intensive to uninstall all the trials, oh woe is you...

I believe WorstBuy can help you with that. *cough*Geek Squad*cough*

RE: Another Brand
By danjw1 on 12/9/2011 9:55:16 AM , Rating: 2
I guess you never had to work with a Dell. I remember one system I had from work, that has a Macafee firewall. It wouldn't update, and it wouldn't let me uninstall it. It was a testing machine, so we needed to restore it to factory settings all the time. I am more then capable of uninstalling software, I just should not have to. For my personal systems, I build my own. I even built the system I used as my desktop at that company.

RE: Another Brand
By ImEmmittSmith on 12/9/2011 10:13:08 AM , Rating: 1
Do these companies believe in "burn in"? If they would take a little more time and verify that their build is solid, maybe the failure rates would not be so high. But it seems they just want to get the product out the door and let the end user deal with any problems. Dell in the 90's and early 2000's was a solid company, especially the XPS line. I stil have one XPS 720 and XPS Gen 2 laptop and they are the most dependable machines I have every owned. I have upgraded the XPS 720 so many times and can still run most of the games today. Wish these companies would learn that cheap doesn't need to mean poor quality. I think most people look at both price and quality of the company. Poor quality means poor return on investment and eventually Going Out of Business!

RE: Another Brand
By bim27142 on 12/8/2011 11:59:33 PM , Rating: 2
I partly agree but we should not be so bothered with this "image" or "perception". Personally I am an Acer user and I got 2 of them already and both never failed me so far... my points being:

1.) Does it work? - Surely, yes.
2.) Is it reliable? - In my experience, yes.
3.) What and how do you use it for? Would you find real value in a $1000 notebook over a $500 Acer when you are doing the same basic things that an Acer notebook can just do fine?

It's cheap and it works and it is reliable... it should not be an "image" thing or "status symbol" IMO. Even if you have all the money in the world, given the points above, having a premium brand for something you do it for the same purpose is pure bragging rights for me...

RE: Another Brand
By testerguy on 12/9/2011 2:52:03 AM , Rating: 2
This is grossly ignorant.

To assume that people stay away from 'cheap' perceived brands due to 'bragging rights' suggests some kind of inferiority complex on your part.

People stay away from 'cheap' products because they are associated with lower quality materials, craftsmanship and design. Indeed, this is reflected in the reviews of many Acer products - highlighting as they do that the products are simply inferior. Thus, the association with cheap and 'not as good' is entirely justified.

'Does it work' and 'Is it reliable' are both questions which one man cannot answer based on his own experiences. Try doing some research, compare the failure rates or customer satisfaction rates of Acer to say, Apple. Not only that, but even if it 'works', if the design itself has some fundamental flaws it's not working for the end consumer. For example, a poor quality screen may still 'work' - but even when working it's not as good as some premium brands may be.

Clearly many people do find real value in paying more for something which is fundamentally better, in all the aspects we've discussed, myself included.

Do some research here:

RE: Another Brand
By DkFFIV on 12/9/2011 4:50:57 AM , Rating: 2
Did you read your own article? It states the Acer lost out on points mainly due to "not being innovative enough" - they scored very high on customer satisfaction. All the PCs score lower than the Apples because #1 they're comparing $400 economical PC's to $1000 Mac (without factoring in relative value. They should compare a $400 Acer to a $500 refurbed iMac from 4 years ago and compare user experience) and #2 they seem to have a major hard on for Mac design.

Their only real complaint with Acer was tech support sucked and as a consumer you should expect that for the price you're paying. I know that if I buy a cheap computer and anything goes wrong, I'll more than likely just end up sending it back for a replacement.

RE: Another Brand
By Motoman on 12/9/2011 9:09:22 AM , Rating: 1
Clearly many people do find real value in paying more for something

...because of the concept of being "reassuringly expensive." I.e. Apple. Bose. Monster Cable.

Sure, better quality generally equates with a higher price...but Acer isn't low quality. Nor are the myriad other PC vendors that produce products at or around Acer's price points.

Are there more expensive models than those? Sure. Are they flashier/more stylish/cooler looking? Maybe...depends on what you want. Are they more reliable/perform better/etc. (better quality)? No.

Ergo, unless you're caught up on wanting a flashier-looking product, you're going to get an Acer or something similar.

RE: Another Brand
By rbuszka on 12/9/2011 1:40:36 PM , Rating: 3
Monster Cable doesn't belong in the same category as Apple and Bose, because they make a very simple product (cable) and focus on deceptive marketing practices to market their product. Apple and Bose are just very effective at marketing the strengths of their products and ignoring their weaknesses, and neither Apple nor Bose have a reputation for making products that break after a few years (aside from the foam surrounds on older Bose cone speaker drivers). Audiophiles know better than to look to Bose for quality sound, but Bose's clientele are not audiophiles. They are average joes looking for a product that makes sound, keeps making sound, provides inoffensive sound quality, and is simple to use. Apple is mostly the same way except that there isn't as great a disconnect between the marketing and the quality product itself.

RE: Another Brand
By Motoman on 12/9/2011 2:44:52 PM , Rating: 1
Neither Apple nor Bose have product "strengths." They have, however, deceived you into thinking they do. And they've managed to make you think they have a reputation for good reliability (they don't).

You're a sucker and you've been taken...hook, line, and sinker.

RE: Another Brand
By name99 on 12/9/2011 7:52:33 PM , Rating: 1
You're a person who wants to buy a motorbike and thinks that someone wanting to buy a car is stupid. Your problem is that you're completely unwilling to accept that other people weigh the qualities of a product differently from how you weigh them.

RE: Another Brand
By Motoman on 12/10/2011 4:58:32 PM , Rating: 2
You're wrong. There are no "qualities" to Apple (or Bose or Monster Cable) products that justify their cost. Only the gullible don't get that.

RE: Another Brand
By melgross on 12/11/2011 6:46:06 PM , Rating: 1
Well, certainly there are no good qualities to your posts. Maybe when you mature, you will stop writing such silly material.

RE: Another Brand
By TakinYourPoints on 12/10/2011 6:09:11 AM , Rating: 2
but Acer isn't low quality

No, they're trash.

Like someone else in this comment section said, you're rationalizing getting suckered into buying a $600 POS at Best Buy.

RE: Another Brand
By Motoman on 12/11/2011 10:43:48 AM , Rating: 2
Don't have to rationalize anything when it does everything I want and more. $600 well spent, and if I'd spent $1,000 I would get no extra enjoyment at all.

You're trying to justify getting suckered into paying $1,000 for something when $600 would have been just fine.

RE: Another Brand
By TSS on 12/9/2011 2:09:48 AM , Rating: 2
What should change is consumers buying on the basis of what actually is, rather then what they percieve to be. Education is the awnser there. Not that they need to know everything about everything, they just need to be able to think critically. When somebody tells the average consumer, "apple is a great brand to buy", these days they think "apple is a great brand to buy". What they should do, is think "is apple a great brand to buy?".

You don't have to know anything about computers to compare numbers. If one machine has a Geforce gt263501etx and the other has a gt264501etx at the same price, there's a very good chance laptop 2 is better. "Memory" and "Storage" are words much older then computers, yet consumers can't seem to deduce that memory is needed to process stuff while storage is needed to store stuff when not needed to process.

When i see Acer laptops in a store compared to other brands, i see a good, solid but still cheap laptop. I prefer an Asus, but Acer has always been a solid second choice for me. Not because of brand but of consistent quality whenever i took a look at them. But i imagine most people see "a cheap brown case" (they do use alot of brown, which is why i prefer asus, just as good quality and price only with better designs).

This news worries me though. Mostly becuase they cannot succeed. They don't have the marketing genius nor penetration Apple has. Same reason why apple doesn't make quality machines for a low price. They don't know how.

RE: Another Brand
By testerguy on 12/9/2011 2:59:46 AM , Rating: 1
If one machine has a Geforce gt263501etx and the other has a gt264501etx at the same price, there's a very good chance laptop 2 is better

To ignore the whole plethora of much more important specifications and focus on the graphics card when making a decision, is ridiculous.

But i imagine most people see "a cheap brown case"

Again, to assume that people should not care what something looks like, is just taking a departure from reality. It's like saying people should buy a car even if they think it's ugly - because LOGICALLY they use the car for driving, racing etc, so the looks don't matter. Well guess what, people do care about what the stuff they buy looks like. All manufacturers try to build appealing designs, so if the Acer designs aren't attractive, they failed.

Apple IS a great brand to buy. Why? Consistency in building the highest quality, best designed and best engineered products, in a way that no other company has. Incredible reliability ratings, excellent product reviews, industry leading customer satisfaction ratings - these are all LOGICAL and sensible reasons to like Apple as a brand. Indeed, if you take away any of the above, the Apple brand would fail. Many attribute Apples success to marketing, but to do so is to neglect all of the above. There tends to be a direct correlation between the value of the Brand and the quality of the products/experience that brand creates.

If Acer started to make products with the same quality, reliability, design and customer satisfaction of Apples, they would succeed.

"You can bet that Sony built a long-term business plan about being successful in Japan and that business plan is crumbling." -- Peter Moore, 24 hours before his Microsoft resignation

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