On the Acer deal...
Folks, I am a bit appalled and surprised to see that so many people,
especially those in the media, found that Acer 's announcement
to market the $500 PC initially only in Asia (India, China, etc.) a big
negative. Some folks in the media (WSJ and Baron's, as I recall)
even suggested that the SEC may look into charges of price
manipulation by Iomega management since they did not make it clear
that Acer was not going to sell the $500 PC in the US right away. This
is quite a ridiculous charge and really showed how shallow many of
the "Wises" in the media are about current state of world market.
This episode again proved that most investors, and the financial media
in general, are still quite ignorant of global market and opportunities.
Undoubtedly, many still believe that the US is still the center of the
world and everything is happening only here. Of course, this is no longer
the case. World consumers represent far bigger opportunities than in
the US, and the computer market is no exception. Although, consumer
expectations may be different in different parts of the world.
I personnally thought that Acer 's intention to market the $500 PC in
Asia was a stroke of genius, and its longterm impacts on zip drive
and disk sales would be far greater than potential sales from internet
boxes in the US alone.
The Acer deal surprised me, the intention to sell $500 PC in Asia surprised
me. However, I quickly realized that the implication of this deal can be
much bigger than most folks understand. (That has helped me to quickly
made up my mind and sold everything I got and bought more IOMG.)
Let's me summarize a few huge positives concerning the Acer deal:
1. A deal with Acer is a great milestone by any measure. Bigger than
IBM or Compag deals longterm, IMHO. Acer Group has 1995 revenue
of 5.7 billions, of which 3.2 billions came from computer sales. Only
1.4 billions of this 3.2 came from computer sales in US. Texas
Instruments owns 33% of Acer Group.
Last year, Acer was the fastest growing PC company. They are a very
aggressive and innovative company. Acer mgmt stated publicly last year
that their goal is to become the No. 1 PC maker in the world.
Unlike its US counterparts, Acer knows the PC markets and consumer
needs in US as well as in Asia. They have been very successful in both
US market and in Asia. Performance is a big issue in US, affordability
is key in Asia, which has a humongous untapped PC market.
2. Potential unit sales of Acer 's $500 PC (a true PC, not a dumb internet
box) in Asia is far bigger than potential market for internet boxes in US.
Affordability is a key issue in Asia. Just like the $200 Zip, the $500 PC
will sell like hot cakes in Asia. As usual, Acer has done their homework
and know what consumers want and need. The $500 PC could open
up entirely new huge market for Zip drives/disks. On the other hand,
internet boxes, with its limited use for network only, is an idea that may
not take off at all in US or any where in the world.
3. Acer has been a trend setter. Where they go, others are likely to follow.
The $500 PC is setting a new trend. The Zip fits perfectly in this new trend
and application. Huge new market for Zip drives/disks could open up,
which even KE and the IOMG mgmt folks haven't even thought of.
Acer now say that they will market the AcerBasic in US after all. Guess
what kind of immediate pressure this will put on designers of the
internet box? My guess is that the Zip will be offered as an option or
a built-in in internet boxes to counter the Acer offer.
Forget IBM and Compag, Acer will make IOMG a bigger success story
than most of us have imagined.
As most folks know, I am guilty of being very bullish on IOMG for a
while. But things now look to be even much better than I thought. |
