No time for Acer to be 'cautious' about mobile

Acer's rise in the PC world has been an impressive success story. But news today that its CEO and President Gianfranco Lanci resigned over strategic differenceswith his board clearly illustrates that its ascent has hit some major turbulence.

A quick recap of the Taiwanese company's more recent history: Acer, of course, came from nearly out of nowhere to be a leader in notebook PCs. And to demonstrate its newfound market power, in 2007 scooped up crippled American PC maker Gateway, then E-Machines and Packard Bell. The company triumphantly passed Dellas the No. 2 PC maker in the world in 2009, though according to a recent market share report, Acer sits at No. 3, behind Dell but ahead of Lenovo.

Which brings us to the rather unexpected announcement today. Here's what interim CEO and current chairman of the board JT Wang said to explain Lanci's sudden departure:

"The personal computer remains the core of our business. We have built up a strong foundation and will continue to expand within, especially in the commercial PC segment. In addition, we are stepping into the new mobile device market, where we will invest cautiously and aim to become one of the leading players."

Related links
• Acer CEO resigns over stance on future
• 2010 PC growth sees slowdown, tablet cannibalization

We don't know all the details of what happened internally to bring Lanci, Wang, and the board to this point of disagreement so extreme, that it ended with Lanci leaving. But reading the tea leaves, one thing seems clear: If Lanci was pushing for a stronger mobile device presence, he understands where the future of the computing industry is going. Acer's board of directors may understand it somewhat, but they're being timid at a time that they can't be.

It's hard to imagine the board believing investing in mobile tech is a bad idea. The debate, most likely, came down to how much and how fast.

Betting heavily on the PC
Acer hasn't been shy about its plans. Early in 2010, Chairman Wang said his company's goal was to beat Hewlett-Packard as the No. 1 seller of PCs by 2012. Shortly before that, Acer founder Stanley Shih was even quoted as predicting the demise of U.S. PC companies in 20 years. So we know that Acer has a fairly singular goal: to sell the most PCs in the world.

But looking at the actual numbers you see two things. First, Acer is falling short of that goal. HP is still No. 1 with 19.5 percent of all PC shipments at the end of 2010, according to IDC. And Dell is behind it with 12.1 percent. Acer is at 10.6 percent and is the only of the top five to suffer a significant decline in its share in the last year.

IDC reports Acer's shipment volume is down 15 percent from the final quarter of 2009 to the final quarter of 2010. Contrast that with Lenovo's 21.1 percent growth over the same time period, and Toshiba's 12.1 percent rise in shipments.

The second thing the data tells us is that the PC industry overall, that is notebooks and desktops, is seeing really small growth rates these days, just 2.7 percent from the end of 2009 to the end of 2010, according to IDC.

HP, and plenty of others, are looking at those numbers and planning for the future beyond traditional PCs. For example, HP understood that it needed to be in the mobile space, so it went and bought Palm and is planning to put WebOS on many of its devices, including smartphones and a forthcoming tablet.

No answer for the Netbook decline
One of the keys to Acer's rise was how fast it could sell Netbooks. If you recall back to 2008 and 2009, Netbooks were once the hottest thing around. Acer made deals with carriers, mostly in Europe, to sell wireless plans bundled with Netbooks that had embedded 3G chips. But flash forward to 2011, where market analyst firms like Forrester are predicting that in four years, one in every three Americans will own a tablet. Most of Acer's peers are prepping for that world beyond traditional computing form factors.

"Acer bet very heavily on the Netbook phenomena and it served them well for a period of time," said Michael Gartenberg, analyst for Gartner. "But as devices like the iPad began to eclipse the Netbook phenomena...Acer didn't have a whole lot of responses to the media tablet and smartphone space."

Netbooks are viewed as relatively old, slow, and clunky today compared to the ultralight laptops coming out now, not to mention touchscreen tablets and smartphones.

"The PC business is a good business, but they need to be thinking about devices like the iPad, the Xoom, the Galaxy Tab, and smartphones, which are essentially consumer computing devices," noted Gartenberg.

Acer is "cautious" about mobile
In an interview with CNBC in February last year, the just-resigned Lanci put his companies priorities this way: "We have a clear objective, not to overtake HP, but to become the number one mobile supplier. If becoming number one on mobile means that we become number one on PCs, it's welcome, mobile is still our major focus."

That sounds a bit different than what Chairman Wang said today, that the PC is still "the core" of Acer's business, and that his company is "stepping into the new mobile device market, where we will invest cautiously."

Acer did just release two tablets last week, the 7-inch and 10-inch Iconia Tab, more than a year after announcing they would. They're loaded with Android 3.0, or Honeycomb, which is a good start.

But the trend toward mobile devices like tablets and smartphones is clear. And seemingly everyone is getting on board: Apple, RIM, Dell, Samsung, Motorola, HP, Lenovo, Google, Facebook, etc. Nearly every major tech company has a consumer mobile pitch now, and almost all of them are racing as fast as they possibly can to catch up, not "investing cautiously."

Update, 5:48 a.m. PT on April 1: Acer's chief financial officer, Tu Che-min, told Bloomberg today that Acer needs to be focused more on going after Apple and HTC, rather than HP. To that end, the company this month expects to appoint a president who has experience with tablets and smartphones, and in the longer term will boost its spending on R&D, Tu said.

"There is good consensus among the board members that the tablet is the way to go," Tu told Bloomberg.