Acer in the hole

Netbooks are often sneered at for being technically inferior to regular PCs. While there will always be a performance gap, do you think this will become less pronounced once the performance bar for netbooks raises, leading to many more people adopting them?
No, actually. I think the adoption will go up significantly, but I don’t think it will be by blurring a netbook to become a notebook. I think it will be through identifying what it is that drives the consumer to actually buy an ultra-mobile device and addressing those needs.

Whenever I’ve seen really bad marketing of a net book it’s been when people are trying to position it as a notebook. You stick it on an advert or on a shelf and you say its got this much RAM or this much processor power. So the user takes that home and they think ‘well, actually this looks a little bit like a notebook but its nothing like one.’ It’s not for crunching its for communicating.

Do you think there’ll be a boost in popularity of comparatively cheaper netbooks as the financial downturn continues?
We’re looking at growth in both the notebook and the netbook categories. We’ve seen the market sustain itself really well in notebooks – showing significant growth in units. However we do think an ever bigger proportion of the mobile business will be taken up by netbooks. They will move from 10–15 per cent of the market to the region of 30 per cent of the market within a 12–24 month period.

The economic climate is one factor to take into account, but so is the maturity of the devices, and the motivation of the consumer. If they want something to communicate and do emails, all the vendors, including ourselves, are bringing out more mature devices that are ready for people to hit one button and be online. As more people want to be online all the time, I think that’s going to drive the proliferation of the netbook category.

Would you say that you’re shifting your business more and more towards netbook sales, with models such as the recent 10-inch Aspire One being released?
For sure netbooks are a focus, as is notebooks and desktops. We’re not saying that we’re shifting our focus, more that we’re adding a new one. We’ve got people focusing on netbooks, notebooks and desktops. We hold over 20 per cent of the desktop market, over 20 per cent of the notebook market, and an even higher percentage of the netbook market. Our interest is driving all the categories, not just one of them. We are a leader in the netbook category, the same as we are in the other categories.

Do you think increasingly powerful smart phones such as the Palm Pre and the iPhone represent a threat to the netbook market?
We view the world through the eyes of the consumer who wants to get online and communicate. There are two scenarios. One is a device held in two hands, which is your archetypal netbook, probably with an eight or nine-inch screen size, and the other is a single hand device. Now the latter is definitely an interesting part of the market. I carry around a single hand device in my pocket, a netbook to use on my lap, and a notebook that stays on my desk. I don’t think it’s necessarily a case of one or the other; they can be complimentary. We definitely see a very big market with single hand devices, but we see it more as a PC with phone capability rather than the other way around.

How successful was 2008 for Acer as a whole and would you say it was your most successful trading year to date?
In the UK, it was really fabulous. According to IDC data, we were number one for notebooks in Q3 and Q4. We’ve done a really strong job on the market I’d say. If you look at the total Acer group, turnover grew dramatically. We believe we’ll hit our Q4 margin expectations – which are, lets say, against the market trend of data. We feel really optimistic about the opportunity in the market. I think it’s by focusing by division, and also by category.

We only sell through the channel, we don’t compete with our big retailers by making direct sales. We think by sticking to a very simple formula we’re able to withstand some of the economic ups and downs compared to some of our competitors. We are 100 per cent indirect. We are 100 per cent through retail, e-tail and dealers and that is one of the reasons why we’re growing.

As a worldwide trend, desktop sales are slowing – how have they been performing for Acer?
You’re right, desktops as a part of the market are reducing proportionately. If we take the consumer sector, the market declined 31 per cent in Q4, according to IDC. Our business didn’t decline anywhere near that rate. I think the total available market is reducing in desktops, but I think a key thing when we think about desktops to focus on at least from our perspective is new form factors and new applications. We plan to grow in desktops this year and this will come from games desktops, very small devices, and the all in one category. They’re the areas I see the market growing in.

How is the UK faring compared to the rest of Europe in the PC market?
In units we’re doing really well. Especially in the mobile sector, which is still one of the few parts of the electronics business that is maintaining good year on year results. The biggest issue in the UK market is the players in the market themselves. The value of the market will be decayed by how aggressive we are to each other. There is loads of value to be had and as one of the leaders in the market, we’ve got a responsibility to maintain that value, and that’s our direction through 2009