TO ALL: Acer $500 computer news from WSJ. Another non-techie tries to inform. Is it me or does this author have the "hard drive" statement wrong? Should it not be the IOMEGA Zip drive?
June 4, 1996
ASIAN TECHNOLOGY
Acer Thinks Its Dumb PC
Will Be a Smart Move
By WAYNE ARNOLD
Staff Reporter of THE WALL STREET JOURNAL
Maturity, and the good taste that comes with it, is
knowing the difference between what you can have and
what you need. You don't need a glass of Courvoisier if
the Montrachet already has you aglow. You don't need a
Ferrari if your BMW gets your heart racing. You don't
need another MX missile if you can already barbeque the
planet.
Stan Shih thinks you don't need Intel Corp.'s Pentium
microprocessor if a slower chip gets the job done. After
20 years as chairman of Acer Inc., the man even thinks
you don't need Windows 95 if you can get by on
Windows 3.1.
"Everyone is tired of this business," says Mr. Shih of an
industry that has slowing demand and diminishing returns
to show for years of struggling to offer more computing
bang for the buck. The market is maturing, analysts say.
And one could argue that the only victors have been the
arms dealers: Intel, which keeps managing to come out
with ever-more powerful microprocessors, and Microsoft
Corp., which keeps making its old software obsolete by
introducing new programs such as Windows 95 to run on
Intel's fastest chips.
Seemingly forgotten were average consumers, who don't
want to shell out $1,000 and more to find out how a
personal computer can enrich their lives. So later this
month, Acer will offer them the AcerBasic -- all the
computer they ever needed and not one iota more -- all
for $500. It won't have a Pentium. It won't have
Windows 95 -- its meager four megabytes of
random-access memory and 100 megabyte hard drive
won't support it. The AcerBasic won't even have a
monitor. Mr. Shih expects people to plug it into their
television sets.
"People have been waiting for a $500 PC for many,
many years," he says. "So if we have the means, why
not?"
Why not, indeed. Oracle Corp., International Business
Machines Corp. and Sun Microsystems Inc., all U.S.
companies, asked themselves the same question and
came up with something they call the Network
Computer. Both it and the AcerBasic have been lumped
together as "dumb PCs." The big difference is that the
Network Computer will derive its computing power from
the Internet, thanks to Sun's Java programming language.
Users will log on and borrow as much computing power
as they need from powerful computers elsewhere on the
network.
Mr. Shih says the NC is a nonstarter. People don't want
to have their love-letters stored by Big Brother: That
went out with main-frames in the 1980s. And without the
big servers, Mr. Shih says, the NC isn't worth $500.
"Off-line, their machine is dead," he says. He isn't the only
one who thinks so. Last month, Forrester Research Inc.,
in Cambridge, Mass., published a report predicting that
consumers will shun Internet appliances in favor of
cheaper full-feature PCs, used PCs and "modular PCs --
simpler, cheaper PCs."
This goes doubly in developing Asia, where incomes are
low and Internet connections unreliable, Mr. Shih says.
And that is where Acer sees the biggest market for the
AcerBasic, which may be smart since PC sales in the
region grew 43% last year, compared with just 21% in
the U.S., according to market research firm IDC
Asia/Pacific. Acer doesn't even plan to sell its new
machine in Europe and the U.S. right away. Instead it will
focus on the great unwired in Indonesia, India and, most
importantly, China.
"There's no reason we aren't number one," Mr. Shih says
of China's PC market. According to Brian Kornegay,
senior market analyst at IDC in Hong Kong, Acer ranks
far behind Compaq Computer Corp., AST Research Inc.
and Hewlett Packard Co. with a slender 2.4% market
share. Mr. Shih wants Acer to be in the top three by
1998 and on top in China by 2000.
Trouble is, China's tariffs will put the AcerBasic well
above $500. And Mr. Kornegay says the best-selling PC
in China last year was Compaq's Presario, which, with its
Pentium chip and eight megabytes of RAM, costs about
$2,100, according to IDC.
This may mean that China's consumers aren't about to
trade in performance. Sean Maloney, general manager
for Intel's Asian-Pacific operations, says the belief in
cut-rate computers is premised on two fallacies: first, that
emerging markets want or need older technology and,
second, that people put price before features. In reality,
he says, "emerging markets will leapfrog the West, or at
least pull level." And as for price, "the thing that drives
PC sales is generally the latest and coolest feature. Right
now, for example, it is almost impossible to sell a PC
without a Pentium processor, a modem and a fast
CD-ROM."
Daniel Wong, general manager for AST's Greater China
operations, agrees. "I also firmly believe that users won't
be satisfied without performance." All PC makers are
cutting prices and if customers want to scrimp on
performance, he says, they can get a better deal in the
used PC market.
Detroit's Big Three automakers laughed when in 1954
Volkswagen AG introduced its small, ungainly Beetle to
Americans weaned on V8 horsepower and features such
as tail fins. Acer's detractors may not have bargained on
Asia's silent majority, people Mr. Shih hopes will make
the AcerBasic their first PC. Adding an attractive price to
a respected brand name may give Acer a winning
formula, Mr. Kornegay says. "What more could you
need?"
Please excuse the formatting, didn't have time to correct.
Regards,
Erik. |
