MALTA, 21 September 2004 — It might be wondered what story a journalist from Saudi Arabia could be covering in Malta that could have any local market significance. The fact of the matter is that Saudi Arabia is part of the Middle East and in the structures of most international IT vendors, the Middle East is grouped with Europe and Africa in terms of management. Since the majority of journalists covering important briefings in the Europe, Middle East and Africa (EMEA) group are from Europe, most major events for the EMEA region are held in Europe. This means that journalists representing publications in the Middle East get to rack up lots of flight time traveling to regional press conferences.
On Saturday in Malta, Acer Inc. held its annual EMEA media event. This was an important occasion because in addition to Acer presenting a review of its business in 2004 in the region and projections for the coming year, the event would be graced by Acer’s top management.
On Sept. 1, Acer announced from its headquarters in Taipei, Taiwan, that J.T. Wang, currently president of Acer, will replace Acer Chairman, CEO and co-founder Stan Shih on Jan. 1, 2005, when Shih retires. At that time, Gianfranco Lanci, now president of Acer, Europe, Middle East and Africa (EMEA) and the International Operations Business Group (IOBG), will become president of Acer Inc. Lanci will also become CEO of IT Business, Acer Inc. All three executives, Shih, Wang and Lanci, were in Malta to discuss Acer and its new management and direction for the future.
From the podium, Shih personally went to great lengths to point out that Lanci’s new position marks Acer’s appreciation for his outstanding performance in the European market, including Lanci’s management style and successful business model — all of which will be extended to the Acer Group worldwide. Lanci’s appointment is considered to be a major departure from tradition, as Taiwan-based companies generally do not have European presidents. However, both Shih and Wang specifically mentioned that they view Lanci’s appointment as an important advancement in Acer’s quest to be a truly global company.
Acer’s press release on Lanci becoming president included the interesting line, “In addition to Lanci’s place on Acer’s board of directors after the next election, there are plans to invite another foreign external director on the board to fortify Acer’s knowledge and vision of the global IT Industry.”
Right now Acer does seem to be on the right track to extending its global reach. Europe is currently Acer’s biggest market. Data indicates that for the second quarter of 2004, the EMEA computer market has registered average growth of approximately 20 percent over the same period in 2003. Within this environment, Acer has registered a growth of 60 percent for 2Q 2004.
“We are delighted with the significant performance of Acer over the second quarter 2004. We have gained considerable ground in both the notebook and desktop sectors,” declared Lanci. “Not only have we strengthened our leadership in the notebook segment achieved in Western Europe over the last two quarters, but for the first time we have reached first position across the entire EMEA region.”
Saudi Arabia is one country where Acer is the market leader in the notebook segment. It was an absolute joy to see Emanuele Accolla, Acer EMEA vice president, stand before nearly 300 journalists representing 35 nations attending the Acer annual EMEA event, and deliver a presentation on Acer’s “Status 2004 and Strategy 2005 for the Middle East and Africa (MEA).” Due to the small contribution of MEA sales to the bottom-line of most global IT vendors, MEA presentations are a rarity. Slide shows on the various European sectors are the standard fare at EMEA events. But in Malta, Acer was proud to reveal how well it is doing in MEA, particularly highlighting its success in Saudi Arabia and the UAE. The company also made a strong commitment to serve the region in the future.
Accolla stated that Acer operates in MEA in a manner consistent with the company’s global strategy. While the number of dedicated Acer employees in MEA is low to keep down operating costs, Accolla believes that Acer hires quality staff in the region and there is a constant emphasis on customer service. The small staff numbers mean that regional decisions are made speedily and then executed promptly and efficiently. Acer customers in the region are supported by directly owned call centers and repair shops.
Acer has had success with limited PC assembly in Dubai and Johannesburg. This has kept the cost of Acer’s PCs comparable to white box manufacturers, but the machines are backed by Acer’s reputation, technology and service, which has resulted in high sales. Acer is currently considering expansion of limited local assembly facilities in the region, perhaps even setting up an assembly facility in Saudi Arabia.
“We treat the Middle East and Africa very much like Europe,” explained Accolla. “All markets in MEA, whatever their size, are important for us. We have grown by a factor of four in one year in units in the Saudi market and the UAE and that has been a very unusual and exciting experience for me. Unlike some other IT vendors, Acer markets its full range of products in the region and hires first class employees who are excited to serve and support MEA customers and channel partners.”
Accolla has found that in Saudi Arabia and the UAE, there are two major groups of customers. One group is looking at quantity with minimal cost. There is also a niche market, which is quite large compared to the rest of Europe, of customers wanting to purchase the most advanced, most sophisticated products that Acer has available.
That group of sophisticated customers will probably be quite pleased with Acer’s current strategy of moving from being simply a PC manufacturer to competing in other digital product areas including MP3 players, PDAs, LCD TVs and in December, even digital still cameras. Lutz Schoppe, director, Mobile and Convergence Products, Acer EMEA & US, stated that Acer “wants to be a PC company that offers total digital solutions.”
This means moving deeper into the mobile and handheld areas and focusing on new convergence solutions such as media gateways. Acer also plans to develop more products to stand side by side with its LCD TVs as interest in the digital home concept increases.
One area where Acer hasn’t seen a major breakthrough is in sales of Tablet PCs. Lanci admitted that Tablet PC sales are still a very small part of Acer’s business. He stated that the cost of a Tablet PC is still considered to be too high by most market segments and thus far Acer and other IT vendors haven’t been able to really explain to users the benefits of the Tablet PC. Acer is staying in the Tablet PC market hoping that the coming of Microsoft’s new operating system, Longhorn, will drive down the cost of the machines and introduce popular new uses for the Tablet technology. While currently Tablet PCs only make up 2-3 percent of the PC market, Lanci thinks that eventually the machines could form a 10 percent market share.
Acer appears to be interested in moving toward rapid innovation. The company clearly understands that remaining just a PC vendor spells doom for the future. Shih has made it clear by announcing his retirement that he is making room for new blood and new ideas at Acer. While Shih is only 60 years old and Acer is riding high on success, he is stepping aside as an example for others. Once he becomes the new CEO, Wang will be expected to carry on the company’s global expansion strategy with younger talent.
In Malta, Shih stated that while he is stepping away from the day-to-day running of Acer, he will remain on the company’s board. He also plans to take charge of a new consulting and investing firm called iD SoftCaptial, which will have an emphasis on “intellectual development for the new economy.”
As for Wang, he has promised to work to fulfill Acer’s brand mission of “breaking barriers between people and technology.” To achieve that mission he will be moving Acer forward with a focused approach; keeping new products and technologies in-house instead of spinning them off into new companies. He emphasized that he is committing Acer staff to working as one team worldwide with common goals, putting out a consistent message and providing superior service to customers in regards to the Acer brand.
Tech fans in the Middle East will be able to get a taste of Acer’s new products, solutions and strategy at the upcoming GITEX exhibition in Dubai. At Acer’s GITEX stand visitors will be able to see and test Acer’s desktop and mobile PCs, servers and storage, displays, peripherals and e-business solutions for business, government, education and home users.
“Acer’s aim is to deliver to customers in the Middle East dependable IT solutions that empower people to reach their goals and enhance their lives,” said Philip Ashkar, director of sales and marketing, Acer Computer (ME). “At GITEX 2004, everyone from business to home users will be able to get an understanding about what Acer does. With senior executives available for meetings and discussions, we will make it clear what Acer’s Middle East operation can do in terms of providing best-of-breed technology coupled with unparalleled support and services.”
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