Acer has committed to continue producing tablet PCs through 2012, even though the company has seen poor returns with its initial venture into the tablet market.

Acer founder Stan Shih commented that the company would persist with its tablet PC ambitions, even though sales of Acer tablets in 2011 were slow. In persisting with tablet devices, Shih also said that the company he founded would keep plugging away at the smartphone market, too. Even though the company has struggled with its mobile devices division, the Acer founder said that there were no plans of firing people working on smartphones or tablets at Acer, which is contrary to what has been rumoured.

Silver lining?

Digitimes reports Stan Shih as admitting that sales of Acer tablets have been poor to date, but his company’s persistence is likely evidence that there is too much at stake with both tablets and smartphones to throw in the towel already. Moreover, he added that it took Acer years to gain much traction in the notebook space, a fate that has since changed with the company being one of the largest vendors in the world.

The iPad and Kindle market

Poor sales of the Acer tablet PC is indicative of the tablet market in general – or rather lack thereof. What the market has been is an ‘iPad’ market – with high profile challengers like Motorola, HP and Research In Motion failing to make an impact. This position of sole dominance has since changed, with the arrival of the Amazon Kindle Fire tablet PC.

The Fire, which shares many of its hardware features with the BlackBerry Playbook, has managed to make massive inroads in the tablet market due in part to its cut throat price, Amazon’s large retail network, the media services that come with the tablet and Amazon’s reputation built off of the Kindle e-reader.

Microsoft has just signed a patent licensing agreement with Acer and ViewSonic for devices the two companies manufacture that run on Google’s Android mobile OS platform. The two firms join a growing list of companies who pay Microsoft a fee for every Android device they sell, all but negating the ‘free’ price tag licensing Android OS comes with.

The Seattle Times reported on the deal, writing: ‘The agreement with Acer covers Microsoft’s patent portfolio for Acer’s tablets and smartphones running the Android platform. The agreement with ViewSonic covers Microsoft’s patent portfolio for ViewSonic’s tablets and mobile phones running the Android or Chrome platforms.’ Note that allegedly Chrome devices violate Microsoft patents, too, a detail I had not picked up on in previous litigation.

How much are they paying?

While none of the parties involved released the figures being paid for the Microsoft patents being used on Android devices, it’s likely they’re each paying $5 or more per device sold, given that’s how much HTC is allegedly paying Microsoft to license mobile patents.

Whose left?

Microsoft now has Android patent licensing agreements with all but two of the major Android vendors, with those two being Samsung and Motorola. However Microsoft recently entered a legal battle with Motorola for patent violation, while the firm has reportedly been engaged in talks with Samsung about licensing patents pertaining to their Android devices.

Given how Microsoft has been on the offensive against Android vendors, its no surprise Google has been desperate to acquire mobile patents to protect its platform and the companies that have built their livelihoods around the platform. What’s more, Android has become a rather lucrative business for Microsoft, with the software giant reportedly making at least three times more money on Android sales when compared to sales of its own Windows Phone 7 handsets.

It’s no secret that the PC business is suffering, and that Acer has seen sales decline in various markets – particularly in Europe where their PC sales fell off a cliff. The company’s problems have since come to light further, with the firm posting even bigger-than-expected loss.

Significant

What’s particularly important about the worse-than-expected Acer loss is that it is the very first quarterly loss in the company’s history. The world’s number two PC maker posted a net loss totaling T$6.79 billion (around £142.1m) for the quarter running April-June 2011. This was more than double the forecast T$3.3 billion as predicted by analysts polled by Thomson Reuters.

For comparison’s sake, Acer had net profit of T$2.65 billion (around £43.1m) in the same period last year.

Things are bad

‘In the second quarter, Acer made efforts to further downsize channel inventory due to stagnant European and U.S. economies, and the slow PC market,’ said the company in a statement. The statement added that: ‘Additionally, the company paid considerably in senior executive severance pay. Consequently, Acer suffered higher-than-expected loss in the second quarter.’

A cynic would look at this as overpaid executives underperforming at their jobs, and given the world looks like it might spiral into another recession, these very PC sales cynics will soon come out of the woodworks.

The tablet effect

Recently, Leo Apotheker, HP’s CEO, said that the tablet effect was real, in that it was having a material impact on the company’s PC business. Netbooks, an area Acer is particularly strong in, have been absolutely crushed by the sharp rise of tablet devices, leaving the company badly exposed financially. Unless PC sales pick up rapidly, it could be some time before Acer returns to its best days.

Tens of millions of units in sales later, there are still those that believe that the iPad and the whole tablet PC category as a whole is just a fad. They range from the uninformed to people who played a material role in shaping the PC industry. The latest to add to the choir falls squarely in the latter category, with Acer’s founder saying these devices are all hype and zero substance.

Move on, please

Acer founder Stan Shih said the hype surround tablet PC devices and the hybrid Ultrabook category was just a short-term fad, reported Digitimes. Shih, in the same breath, urged manufacturers to be more inventive with how they approached the notebook category.

Still respects Apple’s ‘hustle’

Though Acer founder Stan Shih thinks Apple is the fortunate recipient (or well positioned exploiter?) of a consumer fad, he did express his respect for the company’s ability to think out of the box with the iPad, encouraging other notebook manufacturers to innovate in a similar manner.

It all starts with the PC

Shin suggested that the iPad – and accompanying tablet PC devices and even Ultrabooks – are offshoots of the traditional PC. He suggested that all future innovations will come from this same place, meaning the PC will be the sure-fire go-to product while other forks on that platform, like tablets, will merely come and go.

The iPad is no Tamagotchi

While it’s silly to disagree that the PC remains ever important – and will likely remain so in the foreseeable future – to suggest that tablet PC devices are just a fad is irresponsible. Firstly, the last time a high profile tech industry leader spoke prematurely about the future of an Apple problem, he was proven horrifically wrong. Secondly tablet PCs are no Tamagotchis – in the right developers’ hands, the potential is scary.

Finally, one can’t help but wonder if he would be calling these devices fads if the company he founded, Acer, were winning in the space.

Do you think he’s right? Are tablets just fads, or have we only just started to see their potential?

Gianfranco Lanci, the CEO of former number two PC maker Acer, has resigned. This comes off the heels of the company going through a rough patch as tablet PCs cannibalize sales of netbooks, which is a big part of Acer’s business.

Founder has gotten his wish

Incidentally, this comes at a time when the company’s founder, Stan Shih, says Acer needs an overhaul. Shih, who retired from the company he founded back in 2004, said the company needs to focus on improving its profit margins as opposed to being the leading PC maker in the world.

The resignation of the Acer CEO could very well be the first step in the process Shih is talking about.

Resignation effective immediately

The resignation of the Acer CEO took immediate effect, with chairman J.T. Wang stepping in as the interim CEO until a suitable replacement is found. In a statement, Wang reassured onlookers that ‘The personal computer remains the core of our business.’

Wang continued, saying: ‘We have built up a strong foundation and will continue to expand within, especially in the commercial PC segment. In addition, we are stepping into the new mobile device market, where we will invest cautiously and aim to become one of the leading players.’

How the iPad screwed everything up

The biggest problem for the Acer CEO and his company in general is the erosive effects tablet PCs – more specifically the iPad – have had on Acer netbooks. For years a big percentage of Acer’s markets share has come from sales of netbooks, but since consumer interest shifted to tablet PCs, overall netbook sales have fallen off at a rapid click. So, in terms of fundamentals, the departure of the Acer CEO Gianfranco Lanci could be the start of a new-look company.

How that company will bridge the gap the iPad has created will be interesting to watch.

Dell, once the number one computer manufacturer in the world, then number two, and recently languishing in third place, has leaped back into second position, according to an iSuppli report. What makes this turnaround rather astonishing is who the company has to thank – Apple and its netbooks sales crushing iPad.

The netbook factor

The latest iSuppli report pegs Dell at the number two spot, wedged between Hewlett-Packard and Acer. Netbooks – a big component of Acer’s business – saw sales absolutely crushed by the iPad tablet PC. This meant that, as opposed to Dell seeing unprecedented growth, Acer did not have the netbook sales they would have otherwise had to keep in second spot.

Given Dell’s presence in the netbook market is nowhere near the level of Acer’s, and that Dell still has a very strong presence in the enterprise market, the company used Acer’s netbook misfortune to snag what iSuppli analyst Matthew Wilkins called a ‘firm lead’ over its competitor.

Overall sales robust

Outside of the positional switch between Dell and Acer, the iSuppli report says fourth quarter sales of PCs were the best the industry had ever seen. More than 93 million units were sold in Q4 2010, up an impressive 5 per cent from the year prior. Sales for the full year totaled 345.4 million units, up an impressive 14.2 per cent on the 302.4 million units sold in 2009.

It’s your fault, iPad

With a growing chorus of analysts saying the iPad is affecting the entire PC industry, all the naysayers who proclaim it not a productivity tool are overlooking what matters most – and that is the device is stealing sales from other personal computing devices. Netbooks were always most vulnerable, and Acer is feeling it seeing netbook sales declining rapidly enough that out-of-favour Dell has been able to steal some much needed spotlight.

In the wake of the official death of the Dell Atamo, there’s a rumour spreading that Acer, Asustek and Lenovo are prepping ultra-thin notebooks of their own. With the source being the often-right DigiTimes, this rumour is worth taking note of, even if it is somewhat overshadowed by all the happenings at MWC.

Hitting the treadmill for Q2 2011

Digitimes reports that the slim-sized notebook, vying for a piece of the new Macbook Air pie, will start being rolled out in the second quarter of 2011. Supposedly the computer vendors are aiming to make comparatively performing products at more competitive prices than that of Apple’s offering, according to the publication’s sources.

Acer will use Q2 to launch its next generation of Timeline notebooks, with development being outsourced to Wistron. For their part, Asustek will launch its U-series slim laptop models available in 13-inch and 14-inch sizes. These computers will also be outsourced, with Pegatron Technology tasked with manufacturing them.

The Lenovo ideaPad line is supposedly the launch pad the Chinese computer manufacturer will use for its assault on the ultra-slim laptop market. The line is scheduled for Q3, with Pegatron once again being the production partner.

How will these be priced?

While information is scarce on the individual specs of these incoming ultra-slim laptop lines, there is some speculation on pricing. Apparently all three vendors will price their offerings under $1,000 (£623), in an attempt to avoid the fate the Dell Adamo lineup had, which was priced at a painful $2,000 at launch.

Incidentally, these three manufacturers aren’t the first to compete against the new Macbook Air. Samsung was one of the earliest to respond, announcing their Series 9 laptop at CES 2011 last month. Being fond of the new Macbook Air, we’re curious to see how these Windows-based ultra-slim laptop offerings fare.

After some confusion regarding Acer’s stance on netbooks, and whether the company will continue to produce them, the group has released a statement saying that the rumours of the Acer netbooks demise are greatly exaggerated, and that they will continue supporting the diminutive computers for now.

Your own people say so!

Lu Bing-Hsian, a Taiwanese sales manager at Acer, made a recent comment that Acer’s heavy tablet bet was ‘aimed at phasing out netbooks’.

As smart, and likely true, as that sounds, Acer PR have come to clear up the storm that comment has sparked. The company says [via Techradar] ‘Acer recognizes that the computer market is changing: As PCs are no longer used to only create content but are more and more becoming consumption tools, new devices and new form factors are appearing.’

The statement continues, reading: ‘This means the range of devices available to users is getting wider and tablets are just another piece of the mosaic. Therefore they will find their space next to netbooks and notebooks, without taking over.’

We don’t believe you

Acer continues justifying the backtracking, by explaining that tablets are ‘just another piece of the mosaic’ and that ‘they will find their space next to netbooks and notebooks, without taking over.’

This backtracking sounds very much like the actions of a company that don’t want to reveal their entire strategy just yet. The fact is, netbooks haven’t fared too well since tablet PCs arrived. And, given that the iPad sold 7 million units in one quarter means that, in terms of growth, there is a far bigger opportunity with tablet PCs than there is with netbooks.

Acer netbooks will fall to the wayside eventually, whether or not Acer likes it. Hopefully by then, the company’s tablets will be competing with the best on the market so far.

Acer computers, the world’s second biggest computer manufacturer by volume, recently stated it wants to become the number one manufacturer by volume in the world come 2011. A big component of that strategy in the immediate to mid-term future is the Asian market, with the company being particularly bullish about its Acer China division, as well as the great Acer tablet play.

First tablets, then China

The Taiwanese computer brand has placed a huge bet on its ability to get a foothold in the tablet PC market to which it will launch its first batch of products in 2011. Acer’s Chairman, JT Wang, told delegates at the Reuters China Investment Summit that the ‘Tablet market is a huge market and it shows a new path for new growth.’

At a separate interview conducted by Reuters at his company’s headquarters, he said that ‘For Acer, we want to become a significant player as soon as possible’, with the company aiming for 15-20% of the market in 2011 alone.

The Chinese factor

At around $1 billion (£640m) revenue, Acer’s China revenues account for 7%per cent of the business. The company thinks the large growth in the tablet market coupled with the ongoing appreciation of the yuan currency will put Acer China in a position to boost revenue to $2.5 billion by the end of next year. ‘In China, purchasing power will increase significantly in the next few years and PCs will become cheaper,’ was Wang’s position on the country’s current financial climate.

The Apple problem

One cannot blame the company for being so bullish about the incoming Acer tablet invasion. Analyst consensus sees the tablet PC market selling in the range of 40 to 50 million units next year. However, Apple’s iPad is expected to take a giant chunk of that market, with RIM, Samsung, and numerous other manufacturers showing interest in that space.

To its credit, Acer is reputable for making affordable high quality computers and the company has already said that while they’re more than happy to let Apple dominate in developed markets, Acer’s strategy is to focus on developing markets. It’s still early days, so whether this Acer China and Acer tablet dual play will come to bear remains to be seen. It will definitely make for great viewing.

To borrow a poker term, Acer has shown its hand. The company that is now the world’s number two PC manufacturer by volume has come out and said that it wants to claim the top spot from Hewlett-Packard before the end of 2011. In fact, passing this ambition off as a desire is a misrepresentation, since the company has gone so far as to say it will happen out of necessity.

‘If the mobile world continues to grow, we will necessarily replace HP as the world’s biggest computer-maker’ is what Acer CEO Gianfranco Lanci told Swiss newspaper SonntagsZeitung (via Reuters). Read that quote carefully, making sure you highlight ‘necessarily’ as Acer basically saying it will usurp HP from the top spot, since there’s absolutely zero evidence ‘the mobile world’ won’t swell in growth further.

Can it be done?

Going from one to two isn’t all that difficult, and Acer computers are solid, so it certainly can be done. However, if HP’s recent quarterly performance coupled with a resurgent work force is anything to go by, Acer isn’t going to dawdle in and just take the top spot.
Furthermore, Acer may be a bit too brazen with its mobile strategy relative to its success rate. While Acer notebooks have shown unbelievable growth, it’s in the other areas of its mobile strategy where we’re a little concerned. Though intuitively the tablet PC – which Acer is betting heavily on – seems a closer cousin to laptops, early evidence suggests that, both in terms of sales tactics and strategy, it’s more like the modern smartphone than anything else. And in this area, smartphones, the company has had very little impact.

While it entered the smartphone business in 2009, with a stated target of six to seven per cent global market share come 2014 at the latest, it’s had very little impact since, especially not the kind of impact that’ll have one believe it can attain the share it wants. Dragging this lengthy example to its conclusion, Acer CEO Gianfranco Lanci may be speaking prematurely, out of necessity.

Prove it, then

Acer computers have a full year to come good on their promise. I don’t want to bet against them, seeing how they dispatched Dell for the number two spot, and how they’ve been on a tear with notebook sales growth. Yet HP won’t roll over and the Acer CEO no doubt knows this, which means the fight for the number one PC shipments spot is going to be plenty fun to watch.