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Acer takes a gamble

Acer is banking a substantial portion of its future on inexpensive, easy-to-use computing devices optimized for one or two functions.

Tech Industry
Acer is banking a substantial portion of its future on inexpensive, easy-to-use computing devices optimized for one or two functions.

The XC concept includes devices that the public has already seen, such as handheld computers and set-top boxes, as well as terminals designed for viewing digital content, Internet-only viewing, or home banking.

"We are repackaging PC technology in a form for single applications," said Stan Shih, Acer CEO. "The PC is a good computer, but it is complicated to use. There are more consumers and end-users right now looking to enjoy IT technology, but not by the PC approach."

Today, the company provided details about its first five XC designs. At the low end is the Compact X200, a TV game console for $199. Further up the food chain are subnotebook-sized CE devices and set-top boxes. Products will mostly come out toward the end of the year.

The XC strategy will allow Acer, a company which has remained mired in the second tier of computer vendors, to capitalize on its unique business circumstances. Acer, as Shih points out, is both a computer and a component manufacturer with a fairly large economies of scale. By leveraging common PC standards, with Acer's production of LCD screens and other components can take out much of the economic risk inherent in introducing new form factors.

"The new products always involve a lot of risk in the market, being accepted in the market. You have to commit to [large] volumes, but if you don't hit it, you have inventory problems," he said. "We already have orders for PCs. With open architectures, we can share the risk."

Although based around PC technologies such as Intel-compatible processors and standard Internet protocols, the XC won't displace the PC, Shih said. Rather, XCs are designed to bring PC-like functions and applications to a plethora of electronics accessories ranging in price from $199 to $1,000.

After the $199 Compact X200 game platform comes the Mobile X100, which will cost $600 and combine Windows CE in the same body that Acer uses for its subnotebook. The X300 will be the company's answer for set-top boxes. The X500 and X700, meanwhile, are specialized desktop systems. The X500 is optimized for video and photo viewing as well as receiving email, while the X700 is designed for home entertainment functions.

Most of the devices will use Microsoft operating systems, such as Windows CE or even Windows 98, but it is not a requirement. "In terms of Internet-only, you are just functioning with a browser. You don't need any Windows," he said. Intel will be the main supplier of processors for XC, but other makers such as Advanced Micro Devices, Cyrix, and Hitachi will be in the mix.

The XC will also include such technologies as USB (universal serial bus), DVD (digital versatile disk), and 2D/3D graphics.

Although some of the XC devices are available in limited quantities in Japan, most of the new devices won't appear until the fourth quarter or in the first part of 1999, said Shih.

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