Building PCs is no longer enough for Acer
By Zatni Arbi
LUNG TAN, Taiwan (JP): Throughout the corporate world the message is crystal-clear. CEOs and their top people saw that early on, within just a few years, making and selling PCs alone would no longer be sustainable businesses.
Although the PC market is still large and continues to grow, the margin has become thinner than a human hair due to the extremely competitive environment. Servers and high-end workstations may command high prices on the market and, therefore, bring in fat profits, but that's not exactly the area in which Acer, Taiwan's number one PC maker, is known to be that strong. So, what should they do to stay viable? Become one of the major players in the booming Internet market.
That was the gist of the series of seminars and exhibitions held during the two-day e-Life 2000 event that took place at the company's Aspire Learning Complex in Lung Tan, Taiwan. "Stop browsing, start living," says the slogan, indicating that Acer believes it is time for all of us to stop using the Internet just for browsing for information and fun and to start living and making a living with it.
To add substance to the words, the company has started calling itself an "Internet enabler" company, creating and offering hardware, software and services that will help us live the e-life without having to become techies.
Not surprisingly, the exhibition halls during the event were filled with the latest technologies and solutions that Acer and its partners are working on, from Internet appliances to set top boxes, from video telephones to Bluetooth modules for Personal Digital Assistants (PDA) and notebooks, from large-size plasma screens to Acer's own smart mobile phones.
The main feature of the appliances, as opposed to the PCs, is that they are dedicated devices that need minimal to no technical know-how to operate. The Web Phone, for example, is a telephone with an LCD screen and retractable keyboard that comes with a built-in browser. This will save the user from the headache of learning how to handle a multitasking operating system.
What about the PCs and notebooks that Acer has been building and selling for many years? Stan Shih, Acer's very low-profile CEO and chairman, reminded the media, "Acer is not abandoning the PC industry. PCs will remain Acer's core business. However, we hope that, in a few years' time, you will see more `Acer Inside' than `Wintel Inside' products."
He was, of course, referring to the PCs that contain products from Microsoft and Intel. How can that be achieved? "To turn this vision into reality, we are actively involved in software development," he explained.
Sales of Internet appliances, which consist of hardware and software, are expected to eventually account for 50 percent of his company's total revenues.
Preparation for the expansion outside the PC hardware industry has been going on for quite some time, and the results have begun to emerge. I was deeply impressed with the Aspire Learning Complex, where I spent the three nights I was on this island.
The complex is part of what Acer calls the "Aspire Park", a technology park built on a 172-hectare hilly stretch of land (in case you are not familiar with Acer's products, Aspire is the brand of Acer's line of multimedia home PCs).
The 99 rooms in the complex may not be exactly comparable to five-star hotel rooms, but there is an obvious emphasis on functionality. If you're a guest, you can use the exercise room, swim in an indoor heated pool or jog in the park.
The area, which is misty and foggy most of the time, is suitable for tea plantations, and was so cool when I was there that I never had to turn on the air-conditioner in my room. The complex also boasts a theater and a 7-Eleven convenience store. It has everything one needs when taking part in a short training course, and that is just one of the main purposes of this complex. Executives from high-tech companies in Asia come to this center to attend seminars and short courses on various management topics.
The development of the entire park, which is estimated to have cost Acer US$8 billion in 10 years, is still underway, but the construction of several buildings and the houses for Acer's employees are already completed. When it is finished, the park will provide 10,000 jobs and as many as 6,000 employees and their families can live in the housing complexes. Annual product output, including components and software, is expected to reach $8 billion annually. Acer's second display factory is also being built in the park, right behind the Learning Complex.
As part of its transformation into an Internet organization, Acer has also restructured the entire company into six business groups specializing in development of intellectual property, infrastructure, digital services, software and Internet appliances.
One of the company's ventures in digital contents is the newly launched Acer121.com, a family portal intended to provide every Taiwanese family with everything they need: Education, information, shopping and entertainment. The Learning121 site, for example, provides educational materials for all ages. More than 7,000 courses are available, including courses in time management and the development of your listening skills.
Currently available in formal Chinese, the pages on Acer121.com will be transported into simplified Chinese and will be aimed at mainland China. Eventually, the contents will be provided in English as well as in various other local languages for local communities throughout the Asia Pacific region.
What about partnership? In the past few weeks we have seen announcements by top IT companies, including Hewlett-Packard, IBM, Compaq and Sun Microsystems, that have set aside some funds to get small technology startups off the ground. It is, therefore, not really surprising that Acer, being one of the top ten PC companies in the world, has also formed a new business unit, Acer SoftCapital Group (ASCG), which will provide venture capital and investment for startup companies that are trying to develop innovative technologies, software and Internet services. Acer is also inviting high-tech entrepreneurs to its incubation center, called InnoCenter. This center, which will be part of the Acer Park, is slated for completion next year.
And what about the heightening tensions between China and Taiwan? Is Acer worried? Like most other Taiwanese companies, Acer is still looking at China as a big marketplace that it should not forego. "We are not interested in politics," said Stan Shih with a broad smile. (firstname.lastname@example.org)