Acer Pulls Back From Windows, Will Focus on Android and Chromebook

Radu Tyrsina
by Radu Tyrsina
CEO & Founder
Affiliate Disclosure

Bad news for Microsoft – Acer is apparently rethinking their Windows strategy, planning to offer fewer Microsoft products and focus more on products delivered by Redmond’s rival Google – Chromebooks and Android devices. This comes after Acer’s second-quarter earnings call where the Taiwanese company has posted a surprise second-quarter loss, having unexpected lower sales and rising expenses.

acer pulls back on windows sales

This is yet another hit for Microsoft, after so many bad news recently (Microsoft stock poor performance, NSA scandal, slow sales of Surface RT, lost SkyDrive trademark, Surface Pro price discount). Acer’s president, Jim Wang, told investors in the latest conference call:

We are trying to grow our non-Windows business as soon as possible. Android is very popular in smartphones and dominant in tablets…I also see a new market there for Chromebooks.

One of the reasons behind Acer’s poor financial results is obviously the decline in PC shipments, with Windows 8 apparently being the biggest culprit. However, it’s interesting to observe Acer’s interest for Chromebooks, but according to NPD Group, they actually represent a growing market.

Acer to offer fewer Windows products

And you really can’t blame Acer for not sticking with Windows 8, as the company has put on the market a good number of different-sized tablets, laptops, hybrids and even all-in-one PC units. Acer was the first one to test the waters with a small-form Windows 8 tablet but even that hasn’t worked out quite well. To “mark” the fact that its Windows products aren’t selling that well, Acer is now selling the Acer Iconia W3 tablet for US$299 (the 32GB model and US$349 for the 64GB, both cheaper by eighty dollars.

The Windows strategy didn’t seem to yield as planned and Acer has had to suffer with some disappointing results in the second quarter:

  • Operating loss of NT$613m ($20.5 million) compared to an operating profit of NT$433m ($14.5 million) for the year-ago period
  • PC shipments were down 35.3 per cent for the quarter

The biggest drop, almost a collapse, was experienced by the notebook/netbook sector, which is apparently being cannibalized by tablets. Probably Acer is banking on Chromebooks to cover this loss thanks to their affordable price, which also constitutes the unique selling proposition. Wong also said:

For the PC industry, I haven’t seen light at the end of the tunnel. First, we have to sustain our market share and protect our bottom line … and by doing tablets and smartphones right, we can be prepared for the day after tomorrow.

Acer isn’t quite the brand you’d look for when searching for a smartphone and it seems that the company wants to fix that by joining the Android army. By 2014, Acer is looking to have important sales of Android devices, which might account for as much as 30 per cent of Acer’s total revenue. Acer’s chairman, JT Wang:

The Windows camp has to do something to reestablish or reinforce confidence among PC users. People are reluctant and are holding their purchasing decisions.

Recently, we have seen Asus pulling back on Windows RT, after releasing on the market a few promising devices, such as the VivoTab RT. Microsoft is trying to improve things for OEMs with the Windows 8.1 software update, but that won’t fix things, most likely. Is Windows really doomed?

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I am enjoying my W3 (64GB model), although I only got it because of large “incentives” of almost $100: Office Depot offered a $50 Visa prepaid card (if I set up and used their credit card to buy it), minus NC sales tax, $26, on tax-free back-to-school weekend, minus 5%, $17.50 for a floor/demo model.

Windows 8 (and the 8.1 upgrade I checked out with the Preview download on a touchscreen convertible of mine) seems well-suited to this kind of device, so I decided, at this pricing, to get it to see how it works out. If Win8 and/or Acer low quality strike again, I am not out too much.

Seems to me Acer and Asus should consider some kind of merger (most likely Asus acquiring Acer) if any kind of good synergy could come of that.