Ripping up the rulebook

"My background is an MBA background and I must confess we didn't learn how to manage business in a declining environment."

Jason Chen is happy to admit that nothing in his formal business education at the University of Missouri prepared him for the challenge of helming the world's sixth-largest PC vendor.

The personable Acer CEO was in London to talk through where Acer is on its transformation journey as he approaches three years in charge of the Taiwanese notebook specialist, which was hammered hard when the bottom fell out of the PC market.

The previous day, Chen had been at consumer tech show IFA Berlin, where Acer unveiled a trio of products, including the world's first curve-screened notebook and the first notebook to measure less than 1cm thick. And in the same week, Acer announced its expansion into the "petwear" market with the acquisition of Taiwanese start-up Pawbo.

Both these developments offer important clues as to where Acer is heading under Chen, who admits there was "a lot of anxiety" at the firm when he joined in December 2013 as the fourth CEO in two months.

Embracing curves

The latest headline-hogging notebook launches are a signal of Acer's intent to focus on growing niches within a PC market IDC forecasts will shrink by another 7.2 per cent this year, a decline Chen said Acer has come to terms with.

"But in the overall market there are still some bright spots that are growing, such as gaming, two-in-one detachables, the convertible area and the slim notebook area. We have to focus our resources in the right areas," he told CRN.

"The problem with the PC industry today is there is a lack of excitement and passion. We have to give people a good reason to go out and buy a new PC and that's why we sometimes do something extraordinary or insane - people never thought about a notebook with a curve before, but we did it.

"In the Acer product group, we are constantly talking about what can be done and can we do it less than one centimetre. You could argue how big a deal 0.05 centimetres' difference is. But our engineers want to challenge themselves to do it better than others, and I say ‘good, go do it'."

Under Chen's watch, Acer has formed joint ventures with a Swedish virtual reality outfit Starbreeze and US tablet maker grandPad, and made three acquisitions, including most recently that of Taiwanese petwear start-up Pawbo (the other two being in the fields of sports and transportation). It has also set up two venture capital funds focused on scouting for opportunities in Taiwan and internationally, respectively.

Asked whether he really sees petwear as anything more than a punt, Chen said Pawbo - which allows pet owners to monitor their pets and dispense treats remotely - fits Acer's criteria for new business expansion perfectly.

"Number one, it has to be growing, as we don't want to get into a declining business again. And number two, there has to be no clear leader in the market.

There is no clear leader in the petwear industry and we think we have a good shot at being the leader. We can do it right, and do it big, so I wouldn't call it a bet - if it's a bet, it's a pretty safe one."

Boxing clever

The idea for expanding into petwear came from two interns, confided Chen, who said he had given staff the "liberty to do things out of the box".

"Some of the ideas, such as a curve display notebook [pictured above], involved some internal discussions and people said it was crazy and stupid. But I'm encouraging people to do something that people initially think is crazy. If people just followed rules and did the same thing every day, then human civilisation would stop."

Acer has achieved 10 consecutive quarters of profitability since Chen came on board in 2014, but the emphasis is now on transformation.

"We are in speed-up mode," he said.

Chen was relaxed about Acer's slide in the PC rankings from second place, behind only HP, in 2010 to sixth, with a modest 6.9 per cent slice of the pie in Q2 according to Gartner.

"Before I came in, market share was a big deal, but that changed after I arrived. Our number one thing is profitability. We wanted to regain confidence from our customers and supply chain and make the company sustainable. That's not to say market share is not important, but we want to maximise our market share in a profitable way. We never want to go into loss again."

Despite the fanfare around pet accessories and curved gaming devices, neither should Acer be seen as a consumer-only player, Chen said in reaction to the contention that most B2B resellers line up behind either HP, Dell or Lenovo.

"We do want to change that [perception]. I remember when I came on board and did our first press conference in Taipei, the first question I got was ‘what is your commercial strategy?' I had been at the company seven days and I thought, ‘what do you mean by commercial strategy?'.

"Later on, I realised that 80 per cent of our business is consumer and 20 per cent is commercial, and over time our commercial business has grown up and is now more than 35 per cent of our total business. In certain countries like China and the US it is bigger than our consumer business.

"A couple of things are needed to do [commercial] right. Number one is the product, as the commercial product requirements are different from consumer ones. The life cycle management and security requirements are also different and so we have to make sure we have the right channel strategy. And third is the service capability."

"It would be even better if it was 50:50," he said.

Pet projects

As well as redirecting Acer towards growing niches of the PC market, Chen is intent on forging into adjacent markets through acquisition and partnership. Here are three highlights:

Pawbo

The Taiwanese start-up is one of three acquisitions Acer has made under Chen's watch. Retailing at $169, Pawbo+ is an interactive wireless pet camera with treat-dispensing and laser-pointing capabilities. The idea is to enable pet owners to remotely watch over, feed, praise - and even play whack a mole with - their cats and dogs.

"The idea came from two interns last year - petwear is big business and we should get into it," Chen told CRN.

Starbreeze

Acer placed a big bet on the booming virtual reality market in June when it formed a joint venture with Swedish VR headset maker Starbreeze. Through the 50-50 partnership, Acer and Starbreeze will link up to design and manufacture the StarVR head-mounted display and sell it to verticals such as high-end cinemas, gaming arcades, automotive retail and aviation training. Mass production is scheduled for 2017.

grandPad

In March, Acer made an equity investment in US tablet maker grandPad, whose technology is specifically targeted at senior citizens. The duo are now working with Swisscom on a pilot scheme which will see the solution, which is designed for over-75s, being deployed outside the US for the first time this month.

 

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