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Acer outlines low-cost PC scheme

The Taiwanese company reveals details of its low-cost XC line, user-friendly machines designed to perform limited tasks such as word processing.

Taiwanese computer manufacturer Acer plans to become the first company to roll out a broad line of computing appliances ranging from $200 to under $1,000.

Acer has already begun selling its low-end products in Taiwan and will begin to introduce other products throughout Asia, Latin America, and the United States next year.

These specialized devices, called XCs, would essentially be user-friendly machines designed to perform limited yet varied tasks such as home banking, word processing, and gaming. Stressing price, Acer aims to attract consumers unable to afford a traditional, all-in-one PC.

A high-end XC is not intended to compete with a sub-$1,000 PC, according to Acer spokesman Chris McKie. Instead, a comparatively expensive XC such as a Home Banking Computer (HBC) would be more like a computing appliance that is primarily focused on one function. The HBC, for instance, may feature a built-in smart card, electric funds transferring, and image scanning so that it operates as a kind of automatic teller for the home.

"If [a bank has] a device in my home and is constantly updated, it could be an extremely valuable tool and a cost savings tool for whichever institution chooses to employ that technology," said Jae Kim, an analyst at Paul Kagan & Associates. "If home savings came to me, the connection is made, and I have a relationship with my bank, I can see the value of that."

Acer plans to use Intel microprocessors and the Windows operating system in its high-end models, according to McKie.

McKie also said that the XC's midrange would consist of less specialized devices that use faster chips for more applications. Acer has already designated its Education Computer as belonging to this category; though details remain undisclosed, the EC will likely feature Web access, email, and word processing.

At the low end, Acer plans to unveil a so-called Kid Computer with set-top-box features, CD-ROM capabilities, and an input device designed for smaller hands. Expected early next year in the United States, the device will be tested in the Chinese market at the same time. If successful, the product could be Acer's gateway into the world's largest underdeveloped market.

Acer has already been selling its low-end set-top box in Taiwan, called Cyber TV. A second- and third-generation product will eventually be launched there, according to an Acer spokesman, but currently there are no plans to challenge WebTV in the United States.

In a promotional flurry coinciding with the introduction of the XC last month, Acer chairman and CEO Stan Shih proclaimed that ten years from now XCs will outnumber PCs tenfold. Claiming that Asian computing needs are inherently different from those among Americans, Shih asserted that his company will provide computers that are cheap and execute specific functions.

A product like the XC could sell well if properly marketed to specific population groups in specific areas, according to Bruce Stephen of International Data Corporation. "Although a developing market like China does not have a customer base as sophisticated as the United States, it also does not have the legacy issues that plague PC vendors in the U.S. market," he said.

"I think Acer could create a category and be in a leadership position, and I think a lot of people are very keen to doing business in China. Many other companies are looking into low-cost PCs," he added.

But some analysts see Acer's strategy as far-fetched and a bit naive.

"[Acer is] trying to challenge the PC niche. It's less grounded than Oracle's NC announcement two years ago," said Josh Bernoff, an analyst at Forrester Research.