Acer set to launch low-cost laptops in the third quarter

 

  

Acer has confirmed that it will launch low-cost laptops in the Middle East in the third quarter of this year.

 

An initial volume of 500,000 ultramobile PC units will be released in the UAE, Saudi Arabia, Turkey and South Africa, a senior company official told Emirates Business.

 

“We will be the first to launch ultramobile PCs in the region. This year we will sell half a million units and that’s a very low estimate,” Krishna Murthy, deputy managing director of Acer Computer, Middle East, Turkey and Africa, said.

 

The Taiwanese company, which last year said technology has yet to reach the level required for ultramobile PCs to take off with consumers, declined to provide further information on the devices. But local media in Taiwan speculated that Acer is planning a low-cost laptop to compete against Asustek Computer’s Eee PC laptop.

 

The low-cost laptop carries an Intel Celeron processor, weighs less than a kilogram, has a seven-inch LCD display and can connect to the internet wirelessly.

 

Eee, an abbreviation of Asus’ advertising slogan ‘Easy to learn, Easy to work, Easy to play’, sells at Dh734 to Dh1,835 each.

 

Murthy, however, did not say how much the ultramobile PCs will cost. “We wish we could go lower than that but the problem is we also need technology providers such as Intel and Microsoft. They are also afraid that low-cost units will cannibalise their existing business,” he said.

 

“We tell them the market size is big and that they should not worry, but even if they wish to participate in this, a question arises on quantity. They may probably limit the supply,” he said.

 

Murthy maintains low-cost laptops will not cannibalise other business segments and it will instead drive the growth of the high-end laptops. “Let’s take mobile phones for example. When low-cost mobile phones were introduced it never cannibalised the higher end,” said Murthy, who has seen Acer Middle East grow sixfold since 2002.

 

Until last month, Acer has been holding off on introducing the ultramobile PC, waiting for advances in areas such as battery life, graphics and wireless connectivity.

 

Ultramobile PC needs a battery life like that of a mobile phone, which lasts for 12 to 15 hours. Currently ultramobile PC’s battery life ranges half of that.

 

Graphics also have to be improved. While 3G networks offer internet connections, service charges are still too expensive.

 

Another concern is profitability because though the features vary, marketing costs of low- and high-end PCs are relatively the same. “Will you choose volume of business as against profitability? It’s a trade-off,” he said.

 

According to research firm IDC, Acer holds the number one position for notebooks with a market share of 20.9 per cent and year-on-year growth of 45.3 per cent in the Europe, Middle East, and Africa (Emea) region.

 

IDC places Acer as the number two IT vendor for Emea, after HP, with a market share of 12.8 per cent up from 10.6 per cent in 2006.   Acer, the world’s third largest IT vendor, is the leading notebook vendor in the region’s largest market, Saudi Arabia, with a market share of 24.4 per cent and year-on-year growth of 22.3 per cent.

 

In the UAE, Acer holds number two position with 18.2 per cent market share and stands at number two position for notebooks, which is growing 30 per cent year-on-year with 19.2 per cent market share.

 

Acer is thus set to become the first top-tier computer company to launch a low-cost laptop, confirming the emergence of a new sub-notebook market segment. 

 

The introduction of low-cost laptops is also set to put Acer ahead of the competition. Once these devices are launched, computer penetration can grow fivefold, Murthy said. “If the affordability increases then the market will grow very rapidly,” he added.

 

Murthy said they are expecting HP, Dell and to some extent Toshiba to follow their lead in catering to the low-cost market.

 

“We don’t expect the low-cost market to be for Acer only. It is for anybody. Acer is there, so our closest competitor, HP, should be there too,” he added.