The last year has been a triumphant one for Acer. It leapfrogged arch-rival Dell to become the number one notebook vendor in the UK and in the process struck a blow for the channel against the direct model.
To find out the secrets of its success I take a trip down to Acer’s Heathrow offices to meet Semmy Levit, the UK country manager. While waiting in reception, Acer’s cosmopolitan nature is immediately apparent, with the lively sound of Italian rising above the English chatter in the office.
Levit himself originates from Milan, although his English is perfect. He suggests we have lunch in a little Italian place he knows and I’m not slow to concur. My only disappointment is that he doesn’t drive us there in a Ferrari, but he compensates for that by appearing to know everyone in the restaurant. He even avoids the hassle of having to wait for the bill at the end of our meal by agreeing with the owner, in Italian of course, to settle up another time. Very cool.
Given your recent success it seems right for notebooks to be our first topic, so can you tell me more about Acer’s notebook range?
We are seeing a very interesting trend, which is that the market is moving dramatically towards the larger screen sizes: 17-inch and 20-inch. Most end- users are recognising that they’re buying a notebook but they don’t move it too often, so they prefer to spend a little bit more to have a larger screen. The 20-inch models are full desktop replacement products and are fully powered machines.
There is usually an emphasis on multi media with these: high resolution VGA screens, lots of storage, top CPUs, etc. There are also business applications for these products. If you are an architect and you want to show a customer, on site, the modifications you will be doing to their building, you may well be in the market for a 20-inch notebook. The market for 14 and 15-inch notebooks is still very big, but month after month, even week after week, we see a clear trend towards the larger screen sizes.
A core part of our notebook strategy for 2007 and onwards is to re-address the sub-brand positioning. So while last year both the Aspire and the Travelmate were both present across the entire channel, we have now decided to focus the Aspire brand on the big retailers and etailers and for the Travelmate to be 100 per cent focused on independent retailers, resellers and the B2B channel. Both consumer and professional operating systems will be available under the Travelmate brand and all the price points will be available; from entry level to £1,999.
Are you offering both Vista and XP?
Regarding operating systems, we are finding that our new consumer PCs are now selling with a version of Vista (mainly Premium and Ultimate), but in the professional channel XP Pro still represents around 90 per cent of sales. This trend is dictated by the market, but we expect in the coming months for there to be a gradual move towards Vista Professional.
What about the ultra-mobile market?
Other types of product you can expect to see from Acer in the near future will be a full range which emphasises on connectivity: Bluetooth, wireless, portability, etc. While Acer is a close partner of Intel, we don’t currently have an ultra mobile PC (UMPC) form factor product. One reason for this is our experience of the tablet PC, which didn’t develop into as large a market as we expected. So we are trying to understand the market size and prepare to do a proper launch when we feel the market is ready for this product. However, Acer has a clear strategy on all the mobility products – not just notebooks but handheld and GPS devices.
If you look back three or four years, the big revolution in notebooks was battery life. Since the introduction of Centrino, end-users have now become used to up to four hours of battery life. So if you say to them ‘you can have a device that weighs 300 grams less but your battery life will be only one hour’ there is not a clear advantage for the end-user. They will therefore either go for a full notebook or something that is a lot smaller like a GPS, which is a proper mobile application product, designed to perform a specific function.
The GPS market is now split in two. There are PDAs, that are going more in the smartphone direction and there are dedicated GPS products designed solely to help with navigation. Both segments are performing well, but the PDA market is almost totally a professional one. The dedicated GPS products are much more of a consumer offering.
How does the UK market compare to the rest of Europe?
The move from desktop to notebook in the UK is higher than the rest of Europe, but the average selling price of notebooks in the UK is lower than the other countries. So the UK is less driven by the technology and more by price, which is not necessarily a good thing.
We are hoping that the focus we are putting on the channel, combined with the trend towards larger screens, will drive the average selling price up. We have already seen evidence that this is happening in Q1.
Tell me about Acer’s recent experiences in the desktop market.
We doubled our market share of the UK desktop market last year, becoming the UK’s fourth largest desktop vendor in the process. In the fourth quarter we tripled the volume of our desktop sales year-on-year. The reason for this was renewed focus.
We decided that the desktop market is important for us and for our resellers. If you look back three years, the main vendors said the market is going to die and shifted their focus. In the meantime Dell took a lot of market share, a lot of it presumably from our resellers. So we gave our resellers the ability to make business and to win back business from Dell on desktops. We had a clear roadmap, clear prices and a clear offering.
Clearly the trend towards notebooks is particularly strong in the consumer market. Are there any trends in the other direction?
The reason for this trend is that everybody wants to be connected wherever they are. One market that will stick with the desktop, however, is extreme gamers, because the performance you can get from some desktops is difficult to get from a notebook. At the same time, much of the business market will stick with desktops, as that often suits their arrangements.
Tell me about your consumer electronics form-factor products.
The Aspire Idea is performing above expectations. There is a lot of interest around this product as it is the bridge between the IT and consumer electronics markets and is what will allow people to connect their content with their television. The challenge we and the channel now face is finding the right channel through which to sell this product. We’re seeing some major successes but also some big failures among retailers and etailers. There are no obvious patterns emerging, but we think that the key thing is for the reseller to invest 20 minutes to explain what the product is about. If they do that they greatly increase their chances of a sale.
Are consumers finally getting the digital home message?
My feeling is that the home is already digital. Most people have a broadband connection in the UK and everyone has a digital camera. Everyone is downloading music or movies onto their PC. The next step is to be able to use this content on your TV. There is one bit of hardware that links these two worlds, the trick is how to explain the need for it. This is where the reseller can make a big difference.
What help does Acer offer to the channel to help them sell?
We will start a training process in the next few weeks that will involve our channel partners. This will focus on the context in which the products, for example the Aspire Idea, are expected to be used. The training will be hosted by Acer and will be free of charge.
In May we will have a channel event to which all our channel partners – Acer Point and Acer Active, mainly – will be invited. We will explain our strategy for this year: the product and sub-brand positioning. We will talk about updates to our service, such as new DOA policies, tools we’re giving to our partners to enable them to track the repairs process and the ability we will give to some resellers to repair our products themselves.
Acer Point is the partner programme for independent retailers, while Acer Active is for SMB resellers. Any of your readers are welcome to register on the Acer partner website to see if what we offer meets their needs and to see if we can become partners. Registration also qualifies you for our training.
The new DOA arrangements for Travelmate apply to anyone selling a Travelmate notebook, but the repair initiatives are only available to our partners. A key message for the independent channel is to emphasise our emphasis on Travelmate and Veriton (desktop) as key products for the channel going forward. So I would suggest that they look carefully at our price lists and product propositions, because they will see a lot of benefits that won’t be available to their competitors.
Any last thoughts?
I want to thank PC Retail and all its readers for the support they have given us over the past year. I’m very proud that we became the largest notebook vendor in the UK and if you consider that we work solely through the channel it means that your readers have been a very big part of that. Thank you very much.