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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 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.

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