Made in Taiwan
Taiwanese giant Acer is building success on helpful products and partnership, writes Colin Barker.
The people of Taiwan are noted for their friendliness. In a hostile world, they like to greet each day with a smile on their face. Stan Shih, Acer's chief executive, is Taiwanese to the core and understands his country's culture better than most.
When Shih describes Acer's future with the help of PowerPoint slides, he does so with the help of 'Stan's smiling curve', a benevolent, looping graphic, depicting Acer's, and the Taiwanese people's, wish to please.
It's not hard to understand why this is so. Living just off-shore from that belligerent dragon known as China, which still clamours for possession of Taiwan, the country needs all the friends it can get.
The same goes for its electronics powerhouse, Acer. It is also a bit of a giant, with a turnover fast approaching $13bn, but the company faces stiff competition across the market from Dell, HP, IBM and many others.
At the same time, it is desperately trying to shed its image as a fading Asian tiger threatened by competitors across the region.
Model behaviour
Acer, too, needs all the friends it can get, and Shih has decided that Acer's best friend is the channel.
Shih recently invited a group of international press representatives to Taiwan to review Acer's latest products - of which their were many - and strategies. If there was one message underlining everything Acer had to offer it was this: we will not go direct; the channel is everything.
This hasn't always been the case. After watching Dell's progress, Acer experimented with the direct model, mostly in the US, but had little success.
The company has fared better in Europe where it is now the number two notebook supplier, and number one in Germany. Its European success has come on the back of Acer's partners.
"The European team is very strong. It's basically the team we gained when we acquired Texas Instruments," said Jim Wong, president of Acer's IT products business group. "It helped us to re-organise the operation in Europe."
Gianfranco Lanci, who replaced the original European managing director of Acer, enjoyed so much success through promoting the channel in Europe that he is now head of Acer's global business, covering the whole world outside China.
"Lanci reorganised the channels and then we were able to really penetrate the markets with selected products first. That is the strategy," Wong said.
"The notebook is first, and then we come back with desktops and then servers. With this kind of strong strategy and step-by-step approach, [Lanci] has had very good success.
"That strategy will continue. We will focus on the channel and the products to cover the different segmentations in the market."
Shih is clear about the advantages of being entirely focused on the channel. "The PC business is not an easy business if you don't control inventory," he said.
"That's why HP and IBM like to go direct. Their overhead is so large, they need the margin. If they focus on indirect they have to downsize. Our overhead is very small."
Shih has written books about managing low-cost, nimble businesses and maintains that Acer puts his ideas into practice. He talks about a "new channel business model", which involves two areas: products and strategy.
On the product side, Acer aims to provide a broad range of the most competitive products on the market.
The strategic part focuses on the need to develop "win-win relationships with the right channel partners". Easier said than done, of course.
eCaring for customers
Acer has moved its backroom support for the channel up to a new level.
The company has extensive R&D facilities in Taiwan, as well as a centre of excellence. This concept will be extended to other countries around the world and there will be a facility in Europe - probably in Italy - that will offer direct support for European resellers.
Acer has also introduced the 'e-Caring' initiative: a range of products and initiatives for the monitoring, maintenance and management of systems.
These include a new, on-board monitoring panel for servers that replicate many features usually found only in heavyweight servers and file servers from the likes of IBM, HP, Sun and EMC.
The panel will monitor a customer's server and will notify automatically the customer support centre (in Taiwan at the moment) and the reseller if there is a problem. If the system works as promised, the reseller will know of the problem before the customer does.
As well as relationships and channels, Acer also needs the right products. Jon Collins, associate at analyst Quocirca, said the company has products to make its competition sit up.
"I know people at Dell are uncomfortable. They shift in their seats whenever anyone asks them about Acer," he said. "Dell puts it down to a strategy of making minimal profit on its products to steal a march on the market. Whether it's true or not, the strategy is paying off."
However, Collins warned that Acer could find it hard to succeed on price alone. "In the laptop market especially, product quality and company service are essential," he said.
Acer segments the laptop market into high-end, middle and entry level.
"At the high end, it's all about performance, so we created the Inspire 1700+," said Wong. "It has all the performance and features of a desktop-equivalent system. But it is a very heavy system - a 'transportable' rather than a portable.
"Then there is another category where people need a system that has performance but not necessarily features. Then we have the segment that is very cost-sensitive.
"We will be strong across all the segments, using the latest technology. We see a lot of voice coming in, whether it be voice over IP or wireless, including a lot of Bluetooth and wireless Lans. We believe this kind of convergence is more about the software. The silicon is there for the communications to happen."
The message is, don't dismiss Acer as "'cheap and cheerful".
Wong added: "We were the first to build the Lan onboard the notebook and the first to build the wireless on-board, and we have always been very focused on the communications on the notebook."
And Wong sees this continuing to develop in practical solutions. "We are always working on new ideas - on software switching, for example.
"The idea is the user doesn't have to consider which network is available because, depending on the size of the data, the system picks the right network automatically, and the user doesn't have the hassle," he said.
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