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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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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).

"We basically took a look at this situation and said, this is bullshit." -- Newegg Chief Legal Officer Lee Cheng's take on patent troll Soverain

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