[Homestead] Business Strategy
tvoivozd at infionline.net
Mon Sep 6 12:20:57 EDT 2004
In business, like boxing, when you get a bloody nose your reaction can
determine whether you win or lose. Taiwan businessmen as a class are
inordinately resourceful, as the result of a truly fine public education
system, they have the intellectual resources to solve what appear to be
intractable problems, like the beating Acer took in its initial entry
into the U.S. market.
They cut their loses by withdrawing, to buy time to analyze their
mistakes and evolve a strategy for market re-entry.
While Dell is a formidable opponent and likely to retain market share,
HP and other companies seeking retailer shelf space are less capable,
and I would expect Acer can can give them real heartburn in the
U.S.market. Penetrating the China mainland market is more difficult
because of the existence of several fast growing domestic computer
makers. However in Chinese against Chinese, Taiwan manufacturers have
some advantage against Mainland Chinese. Taiwan manufacturers evolved
thirty years before those in the Mainland, and quickly learned the
technology and marketing practices to successfully enter Western
markets---and of course,they already understand the language and mindset
of Mainland Chinese consumers. There they have the option of meeting
the late-comer Mainland computer manufacturers head-on, or buy into them
like the General Motors that may be faltering domestically due to
horrendous healthcare and pension liabilities, but can revive its
fortunes by manufacturing in China where such liabilities will be vastly
reduced by being spread across a Universal National Healthcare system.
The difference in cost to a manufacturer is presently five percent---no
manufacturer wants and few can stay alive with a five percent cost
The New York Times
September 6, 2004
Taiwanese PC Maker on Verge of Sales Push Into U.S. and China
*By TRUNG LATIEULE
International Herald Tribune*
Acer, the Taiwanese personal computer maker, received a cold dose of
reality the last time it tried to conquer the world. But it says it has
learned its lesson, and it is going after the United States and Chinese
Last week, Acer named as its president Gianfranco Lanci, an Italian who
led its operations in Europe and the United States. The current
president, J. T. Wang, will become the chairman and chief executive. The
management shuffle was caused by the retirement of Stan Shih, the
The promotion of a Westerner to the No. 2 post is an unusual move for a
Taiwanese company. But Acer may need Mr. Lanci's understanding of
Acer, a longtime name in the personal computer industry, is the
fifth-largest PC vendor worldwide. But in the second quarter, it
as the top brand of notebook computer in Europe, with a market share of
16.7 percent, according to the research group IDC.
Last year Acer shipped 2.5 million notebooks and 2.3 million desktop
computers. Europe accounted for 70 percent of notebook sales and 32
percent of desktop sales.
It hopes to repeat that performance in the United States and China, as
part of its aim to become the No. 3 PC seller worldwide within three
years. Acer has already said it expects to sell about four million
notebooks and three million desktops in 2004.
''If Acer wants to be a serious brand business player, it must have a
significant presence in these two markets,'' said T. Y. Lay, Acer's
president for international operations. The company was humbled in its
previous United States foray and exited the American retail market in 1999.
Mr. Lanci, at a news conference in Taipei last week, said that Acer's
United States sales doubled in the first half of this year. He added
that he expected to double United States revenue again next year, though
he did not provide numbers.
Several analysts said the goals were reasonable, largely because Acer
starts from a low base.
''With minimum operation overheads, and quite limited revenue, we are
already breaking even in the U.S.,'' Mr. Lay said. ''We foresee in the
third quarter a profit coming from the U.S. operation.''
Analysts said that competition would be tougher for Acer in the United
States than in Europe or the Asia-Pacific region. ''A good deal of their
success in Europe depends on the fact that they are a foreign company
among foreign competitors,'' said Roger Kay, vice president for client
computing at IDC in Framingham, Mass.
In this environment, Acer is on an equal footing with American computer
firms Dell, Hewlett-Packard and I.B.M.
But in the United States, Mr. Kay said, ''they are fighting on the turf
of domestic competitors who are well entrenched."
In China, Acer's goal is to become the fifth-largest notebook vendor,
though it would not give a timetable. In this year's second quarter, it
was 12th in China with a market share of 2.5 percent, according to IDC.
I.B.M. was first with 21.1 percent.
Acer's interest in China is prompted by its position as the
second-largest PC market in the world, behind the United States. But
international brands are seriously challenged there by local vendors
like Lenovo, Haier and Beijing Founder Electronics.
The company has signed deals with Carrefour, Europe's largest retailer,
and Best Buy
the largest electronics chain in the United States, as well as with
prominent distributors like Ingram Micro
and Tech Data
Acer has no direct sales, unlike other PC vendors who sell through a mix
of direct and retail channels to customers.
''What Acer has done has been very consistent,'' Mr. Kay said. ''With
its 'channel only' strategy, it has made the retailers feel comfortable.
So the retailers are happy to give them shelf space.''
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