Could Acer Make A Successful Run At Challenging The Top PC Makers?


Second-tier activity: Market dynamics


For a long time now, the PC business has been dominated by two companies, Dell and Hewlett-Packard, which consider the category strategic and are willing to duke it out for the top spot. In the background lurks IBM, which is willing to get in the ring but unwilling to get bloody.

The question on everyone's mind, however, is, could a second-tier player take a run at this market and make it more interesting? It's something I often ponder along with the channel gods, who have recently signaled me that the answer is "Yes" and Acer is increasingly looking like the company that just may be positioned to do it.

ROBERT FALETRA
Can be reached at (516) 562-7812 or via e-mail at rfaletra@cmp.com.

The Taiwanese manufacturer is no stranger to the channel, either here or abroad. While its brand may not be as strong as the other big boys, distributors and solution providers know the company and sure wouldn't mind welcoming another serious player.

Remember that Acer is a diligent manufacturer in terms of cost containment, and its Taiwanese roots mean it is smack dab in the heart of where most PCs are being built by contract manufacturers for Dell, HP and IBM.

Additionally, global distributors such as Tech Data are seeing real growth in Acer PC sales overseas.

The first real question that Acer executives need to answer is whether they can compete against Dell and HP on a cost basis. I obviously can't answer that question, but the channel gods tell me that given the company's $16 billion size and vertical integration, it's not beyond the realm of possibility.

I'm beginning to hear one of those consistent drum beats that summon up the gods, so let's ask another question.

Can Acer increase its brand awareness in the U.S. channel and strengthen its distribution and VAR relationships to the point where it makes the cut for consideration when solutions are being specified and sold? The gods tell me it would certainly take a serious marketing effort targeted at the channel and investment in advertising and other awareness efforts, but it is absolutely doable.

But does Acer have the desire and willingness to stick with a decision to break into the top tier? Again, it's a question only the channel gods can answer. But on this, the gods say that Acer executives would have to set some realistic goals for market share and the time it will take them to reach the first tier.

Acer executives would also need to make a rock-solid commitment that will not waver when the inevitable setbacks occur.

 
'While its brand may not be as strong as the other big boys, distributors and solution providers know the company and sure wouldn't mind welcoming another serious player.'

Now let's be clear: CRN's monthly numbers of the best-selling desktops, notebooks and PC servers through the channel show Acer as a distant player. Not much has changed in the past year, although in one recent CRN monthly survey Acer was cited by survey respondents as their best-selling brand in notebooks. But in Europe, distributors tell me that Acer products are seeing strong growth.

All this is speculation, of course, but in the end, no one is in the PC business because they want to remain in the second tier. Let's not forget that HP was a no-show in the PC space in the early 1990s, and Dell wasn't always in the position it is in today.

Obviously, it wouldn't be easy to fight the cost-cutting PC-making machines that HP and Dell have created, but in a market as large as the PC business, there is room for another player to emerge as a significant force.

Acer is a $16 billion powerhouse that can leverage a lot of resources if it so chooses. The company has been a channel player for many years. Only these questions remain: Does it believe the reward is worth the effort?
And does it have the staying power to make it happen?

Make something happen. I can be reached at (516) 562-7812 or via e-mail at rfaletra@cmp.com.