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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 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.

"Google fired a shot heard 'round the world, and now a second American company has answered the call to defend the rights of the Chinese people." -- Rep. Christopher H. Smith (R-N.J.)

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