Acer: We've learned from past mistakes

Vendor claims channel inventory levels now down to a month in the UK

Acer claims its inventory woes are a thing of the past after moving into 2012 with just one month of stock in its UK channel.

Neil Marshall, who joined Acer in November as UK managing director, said the issues that forced the Taiwanese firm to write down $150m (£96m) of stock in EMEA last June are now behind it.

"We are now at the end of the tunnel and going into 2012 in a very positive position in terms of inventory - we are now down to one month," he said.

"We will no longer go chasing market share, which was the strategy until recently. We will be very selective about the deals we take and the partners we work with, to ensure we are a very profitable business moving forward."

Green bananas

In October, Gartner warned that Acer's ill-fated policy of flooding the channel with stock just as demand was drying up could have permanently damaged its fortunes in EMEA.

According to the analyst, the vendor now stands a distant fourth in the global PC rankings following an 18 per cent drop in unit shipments in Q4.

This is not the first time in recent years that Acer has attempted to distance itself from its reputation as a channel-stuffer, but Marshall claimed the vendor's attitude to channel inventory has now fundamentally changed.

"We have reduced the levels of inventory in the channel and are measuring the movement of products on a daily and weekly basis and taking action on anything that is slow moving to ensure it is flushed through," he said.

"I would say we are now at the lower point of the industry at the moment."

Marshall likened Acer's challenges to that of a grocer selling bananas.

"People like to buy bananas when they are green. It is the same for PCs: you have to ensure the stock is fresh. If it's not, it is going to cost you.

"We really want to balance market share with profitability."

Pulling technique

Acer has also moved from a "push" to a "pull" model for its technology by throwing more dosh behind drumming up demand for its products, Marshall said.

Ultrabooks will be a focus for the vendor in 2012, with the emerging form factor expected to generate 40 per cent of its notebook revenue this year.

Richard Hayden, business unit manager, retail at Acer, claimed entry-level ultrabook models had suddenly hit an attractive price point.

"Retailers are positioning our S3 at around £699 at the moment - yes they can go over £1,000 but an opening price point of £699 is not beyond a reasonable purchase price for most people," he said.

Flushing out stock

Marshall said the hard disk drive (HDD) shortage caused by last year's Thai floods actually helped Acer by enabling it to flush ageing stock out of its channel in Q4.

"In Q4 we still had higher levels of inventory than would be ideal and it really did help us as some of our key partners were being let down by competitors," he said. "The situation is starting to return to normal but realistically we are looking at the end of Q1 or beginning of Q2 before things get back to normality."

Hayden said Acer had worked hand in hand with its channel to manage inventory shortages.

"The effect was wider than the HDDs themselves," he said. "Where prices were being elevated by the HDD manufacturers, a lot of the retailers were de-speccing the processors or RAM to maintain the price points.

"This had the effect that everyone was going for lower-end processors so you were starting to get shortages of them as a result," he added.

Holding steady

Acer claims market data shows its change in tack is paying off, with channel sell-out data from both GfK and Context indicating its UK market share held steady or even increased in Q4.

Marshall said: "IDC and Gartner data is based on sell-in. As we were moving all the inventory from the channel, our sell-in was affected. The true measure is how well our products are selling out of the channel."

Hayden added: "In Q4 we were already well entrenched into the new way of doing things and the early signs are that it is has not impacted our market share. We had anywhere between 22 and 25 points of market share with GfK in Q4."