Acer talks 3Cs.............................................
asiansources.com
Exclusive Interview: Rick Lei, Acer Posted: Nov. 26, 1998
PC giant targets consumer electronics
The world's third-largest Pc producer, Acer Inc., has its eye on the consumer electronics market. Initial targets are set-top boxes and DVD players, says Rick Lei, vice-president and general manager of the firm's consumer products unit.
Q: Acer has been a major PC maker these past years. Why did the company decide to move into consumer electronics?
A: We see it as a very natural move for PC companies, considering that a number of digital consumer products use the same technology as PCs. DVD players comprise one example: The manufacturing process involves digital programming, MPEG-2 compression and decompression, which are all very familiar steps to PC producers. Even the testing and QC criteria for set-top boxes are the same as those adopted for PCs.
Our main disadvantages lie on brand names and sales channels. Japan makers have built a strong sales network and their brands have gained a wide market following. The biggest challenge for us is to establish the Acer brand in the consumer electronics field.
Q: How do you intend to penetrate the market, saturated enough as it is?
A: Acer aims to be more than a hardware manufacturer. We think that this way we will be able to create a niche for our own brands. We plan to concentrate on selected consumer products at first, and promote them aggressively in the Asia-Pacific region, with the exception of Japan and Korea. For the other markets we intend to carry on OEM projects for the time being.
Q: What specific products does Acer intend to specialize on?
A: We are looking into digital equipment, those that will help evolve the current life styles of peoples and families. These are products that can enable home shopping and karaoke-on-demand. Specifically, our R&D plans are geared toward developing more advanced DVD players, digital satellite receivers and NetPCs.
We are currently promoting our set-top boxes, which can access the Internet and receive satellite broadcasts. But the high costs and the low application level of the product are hampering market growth. Our total shipment of set-top boxes last year reached only from 15 million to 20 million units.
Q: What are Acer's DVD plans?
A: We have had no sourcing problems. What we are targeting at present is control over the technology so we can cross the industry's entry barrier. Toward this we have entered a joint venture with Hitachi and have acquired several patent cross-licenses from the members of the DVD consortium.
In 1998, DVD player prices in the United States ranged from $299 to $349. This year, quotes are likely to be between $199 and $249, which will be a very sweet price. Acer is planning to top that with a $199 model.
Q: Japan's major brands have been dominating the market for years. How will you shake that status quo?
A: Most Japan manufacturers have lost sales these past years. Product development and technology are their main problems, as these costs a lot. As a result, a number of Japan suppliers have been wanting to shed off the electronic-giant image and evolve into 3C companies.
For Taiwan, technology is not a problem. The key is market repositioning. In the future, most R&D projects for consumer electronic products will consist of PC technologies, an area where we are ahead of Japan. [For example], I am confident Acer will catch up with Sony, our major competitor in set-top boxes, in a few years.
Q: How will Taiwan's electronic industry fare this year?
A: I see no major technological breakthroughs in TVs and audio, but I am expecting a horde of new set-top boxes and videophones. Future handheld PCs will enable connectivity with mobile phones.
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