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Acer pins failures in iPad's wake on ex-CEO

updated 11:20 pm EDT, Tue May 10, 2011

Acer denies ex chief Lanci's claims on failure

Acer shot back at its ex-CEO Gianfranco Lanci's claims that their nationalism held the company back with a statement later on Tuesday. The PC builder rejected the notion that Lanci had been thwarted in countering the iPad by Taiwan executives' refusal to hire more foreign engineers. It also didn't see the CEO's nationality as a problem and cared only about whether its leader could foster long-term growth, which Lanci couldn't based on Digitimes' account of events.

The commentary instead blamed Lanci almost exclusively for its poor mobile performance. Whatever explanations he was giving out of the CEO position, he hadn't given any reasons for sub-par performance in fall 2010 and winter 2011, Acer said. Tablets were too early to gauge, but even the smartphone business saw overstock of devices like the Liquid Metal as well as financial trouble.

When touching on the performance of its Iconia Tab A500, Acer also denied that it was late to the tablet market because of its lack of engineers. The firm claimed to be proud of being second only to the Motorola Xoom in Android 3.0 tablet shipments despite Motorola having delivered just 250,000 Xooms in the first quarter of the year, or just over five percent of what Apple managed with the iPad.

Lanci hadn't responded to Acer's counterargument as of Monday night.

Acer's comments appeared to sidestep Lanci's larger argument that it was important to compete in the context of the iPad and not just a subset of the market. Many of the company's other top executives, including chairman JT Wang, also repeatedly insisted that the iPad was having no effect on netbook sales despite it becoming clearer that Apple was cutting in. Even as late as February, just two weeks before the iPad 2 was unveiled, Wang believed the iPad would cease to be a factor and that netbook sales would bounce back in step with the rise of Acer's first tablets.



By Electronista Staff
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Comments

  1. SockRolid

    Forum Regular

    Joined: Jan 2010

    +16

    Acer's biggest problem

    Acer's biggest problem is one that they have no way of fixing. They think that low price is a killer feature. Wrong. If you train customers to seek out the lowest price, they have no brand loyalty. As soon as Brand X releases a cheaper device than yours, you're finished.

    Acer's second biggest problem is that iPad 2 is relatively cheap already. Hard to beat Apple's economy of scale created by huge demand for iPad 2. Tough realm, Acer.

  1. FreeRange

    Fresh-Faced Recruit

    Joined: Jul 2009

    +8

    Agree with SockRolid on the "low price feature"

    SockRolid is absolutely right. Not just Acer, but many, if not most mainland China and many Taiwanese companies think that low price / lowest price is their unique selling proposition. I speak on this subject frequently and refer to it as the "Walmart Effect". Walmart, the single largest exporter of Chinese made goods has taught them that you need to drive your costs down. That "every day low prices" is the way to succeed. Instead of teaching companies to build great value! It is a huge problem in Asia, and is a key driver as to why companies try to game the system by using inferior ingredients and components, and cutting corners, instead of making great products.

  1. Fenevad

    Fresh-Faced Recruit

    Joined: Feb 2011

    +4

    Minor point + one observation

    Just a minor point, FreeRange, but Walmart is the single largest *importer* of Chinese goods.

    What you call the “Walmart Effect” is certainly part of the issue, but it's hard not to engage in price warfare when Chinese and Taiwanese companies are engaged in a commodities market. Who really cares who makes your cheap Chinese PC? Unless they can make their brands matter in some way, then the only differentiator for similarly specced machines is price. Microsoft has encouraged this trend (it's in their interest to sell lots of copies of Windows) with their (largely ineffective) advertising against Apple, which always focuses on the price differential of allegedly equivalent machines. (That whole notion of equivalency causes all sorts of angst and analysis from countless blogs.)

    By contrast, Apple (like them or not) have managed to convince the world that they are not a commodity, that you can't substitute anyone else's product for their own. So they compete based on brand experience. Someone looking for an iPad probably isn't going to want a PlayBook or a XOOM (and would be disappointed to get one), so everyone else is in the situation where they are seen as the interchangeable (with each other but not with the iPad) alternatives.

    So Apple has done a tremendous job of escaping the commodity pricing trap by positioning themselves in another category. But if you are a Taiwanese or Chinese PC maker, you don't have that luxury because people don't see your product as inherently different from any other Windows PC and they will buy whichever one is cheapest.

    If you are a PC maker, you want to get out of that space, but it is catch-21 situation: you can't make and sell a higher-priced machine until people see you as different, but no one will see you as different until you break out of the price-driven commodities market.

  1. sibeale1

    Fresh-Faced Recruit

    Joined: Feb 2006

    +2

    Structural Problem

    The short-term-profit, no-long-term-commitment mentality is also to blame. It's certainly possible for Asian countries to produce hi-quality, brand-distinct products, like Nikon and Toyota. But this takes a commitment, patience, and investment to build the brand. It's easier for closely held companies to do this. The problem for many of these copycat companies is that they are owned by vast numbers of stockholders who have no loyalty and drive the management to focus only on the next quarter's profits.

  1. Mr. Strat

    Junior Member

    Joined: Jan 2002

    +2

    Just maybe

    Everybody else making tablets is an alsoran - and Acer's main problem is that they make cheap, crappy stuff.

  1. JeffHarris

    Fresh-Faced Recruit

    Joined: Oct 1999

    +2

    Acer IS Brand X

    Acer, like all the other PC box stuffers made their businesses on stuffing boxes with parts, loading some variant of Windows and counting their pennies of profit.

    The world has changed.

    Microsoft has been stagnant for years while Apple has been working on the iPod, iTunes, the iTunes Store, Apple Stores AND on the iOS for at least 10 years. There are now hundreds of millions of Apple customers out there, not just us long time Mac users, who are now used to better products and a superior user experience who are unwilling to accept mediocrities, like those churned out by Acer and their ilk, especially when it comes to mobile devices.

  1. bmovie

    Fresh-Faced Recruit

    Joined: Nov 2008

    +3

    Economic Recession, Anyone?

    In this Economy, instead of choosing "price" over "quality", one now chooses "none" over "price".

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