Acer Seeks Turnaround in Simplification

By newsdoug on December 16, 2011

Acer looks for new direction wtih cleanup plan Taiwan’s Acer (Taipei: 2353), the former PC high-flyer that has fallen on hard times lately, is launching a new plan to revive its fortunes by aiming to reduce its bloated product line by around two-thirds, a move aimed at helping the company clean up house and recapture the innovation that made it a strong contender in the first place. Local media are quoting Acer Chairman J.T. Wang saying the company will review all of its products and weed out the many money losers over the next 3 years. (Chinese article) This looks like an important first step to cleaning up a company whose rise to prominence began about a decade ago when it bet correctly on the future of laptop computers, putting a major effort into developing that part of the business. But over the last 3-4 years, Acer started to lose its way, becoming more of a follower than a leader by jumping on all of the latest industry trends, including netbooks, cellphones and most recently tablet PCs. I suspect that many of these business lines are doing poorly due to stiff competition and Acer’s late arrival to many of these products. Accordingly, Acer’s first step to restoring its fortunes should be a thorough review of all of these businesses and elimination of most or all of the unprofitable ones, which is what Wang seems to be proposing. But that kind clean-up should be just half of a two-pronged strategy that the company will need to reverse its tumble. The other prong, of course, is to regain some of the innovative energy that made it a leader in the notebook space for a solid period of 5 or 6 years as that business boomed. Cleaning up a cluttered product line will be relatively easy compared to becoming more innovative, as the latter is clearly key to sustained success and only a very small number of companies have shown the ability to keep creating popular new products over an extended period of time. That said, I applaud Acer for this new product cleanup, and would expect to see some innovative new products coming out of its catalog in the mid- to longer-term if it really wants to complete a turnaround.

Bottom line: Acer’s new plan to reduce its product line by 2/3 is an important first step to its turnaround, but it also needs to innovate with popular new products to complete the effort.

Enjoy this blog? Please spread the word :)