Acer wants to be number three

Acer wants to be number three

Acer expects to be the world's third-largest PC seller by the end of 2008, with a 10% share of the global market and US$20 billion in revenue.

To get there, the company needs to increase revenue five times over last year's roughly US$4 billion, expand its US presence, arguably the world's most competitive PC market, and displace the current global number three, Lenovo.

And Acer chairman JT Wang says it's going to do so without any mergers or acquisitions, without innovation and without focusing on the Chinese market.

"We don't want to be a pioneer anymore," Wang says. "Innovation should not be respected so much," he adds, explaining that some companies boast thousands of patents, but most don't have any commercial value. Innovation should be linked to commercial success, he says.

Acer plans to sit back and let others do the innovating, only engaging new products when they're an assured success. Then, the Taiwanese company will bring its global marketing and retail partnerships to bear and "we'll sell like hell", says Wang.

The company will grow sales at an annual clip of 40% to 50% over the next three years, Wang says, as it increases sales to the US, its new target market. Acer's sales there this year should reach US$1.2 billion, as the same team responsible for its success in Europe works its magic there, he says. With solid groundwork in place, Acer could expand US sales to US$4 billion "very fast", he adds.

Such fantastic growth in the cutthroat PC market might seem far fetched if Acer hadn't been on such a tear so far this year. The company's PC shipments during the second quarter grew 66.1% compared to last year, mainly due its ability to capitalise on two areas of strength, low-cost PCs and European growth, according to market researcher IDC.

Acer ranked fourth in the world during the April–June quarter, with a 4.4% share of the global PC market, behind Lenovo's 7.5%, Hewlett-Packard's 15.4% and first-place Dell's 18.9% according to IDC.

Its growth rate also represents a much faster pace than any of its front-running rivals. Lenovo's PC shipments only grew 8.1% on year last quarter, while HP rose 17.1% and Dell 23.7%.

But Acer's rivals aren't likely to sit still as it seeks to increase sales.

"[Acer will] have their work cut out for them," says Brian Ma, a PC industry analyst at IDC in Singapore. Lenovo is in a strong position with its foothold in China and new base in the US, thanks to its purchase of IBM's PC division, he says.

Acer has been very aggressive, Ma notes, building relationships with distributors that will help the company reach new markets, and in the tech industry's hottest product, notebook PCs.

For example, Acer marketed a notebook computer in Australia for under A$1,000 early this year, helping it overtake Toshiba as the top seller there, he says. The company has since repeated this with a sub-$1,000 model in New Zealand.

"We definitely see Acer doing very well," he says.

China is not one of Acer's focal points this year. In fact, too much emphasis on China a few years ago hurt Acer, Wang says.

With just 23 million people, Taiwan's market is too small to help companies grow as fast as US firms are able to, so many local companies view China as a second domestic market, due to cultural and linguistic similarities. With its huge market potential, many Taiwanese companies have made it the focus of their brand name strategies.

"But that kind of thinking does not help," says Wang. Companies need to focus on being globally successful, not just focus on China, he says. A change in thinking to focus on a global strategy has caused big changes at Acer, he says. Acer decided to become a global marketing company, and withdrew from contract manufacturing. It emphasised working with distributors and retailers, and growing demand, he says.

The company's main market is in Europe, and the promotion of an Italian, Gianfranco Lanci, to president reflects its importance.

Acer plans to focus on five main products to drive towards its goal to reach the number three spot: notebook PCs, LCD (liquid crystal display) monitors, desktop PCs, a smart phone with GPS (global positioning system) and LCD televisions.

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