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The Honolulu Advertiser

Posted on: Tuesday, January 4, 2005

Taiwan PC firm sets sights on U.S.

By John Boudreau
Knight Ridder Newspapers

TAIPEI, Taiwan — Acer, the personal computer maker, is hoping to do what no other Taiwanese tech company has done: succeed with a global brand.

But its road to success must pass through the United States, the world's largest and perhaps most competitive PC market.

Just a few years ago, Acer made computers for companies such as Hewlett-Packard, Dell and IBM, sold under the American brand names. (Acer spun off its PC manufacturing unit, now called Wistron, at the end of 2000.)

Now, Acer aims to challenge these PC Goliaths on their home turf. The Taiwanese company, after failing to capture a significant chunk of the U.S. PC market during the late 1990s, is making another assault on consumer-rich America, where it has a small foothold.

Developing a presence in the United States is as much about image as it is about price and performance.

"You've got to stand out," said Yeosun Yoon, an expert on consumer psychology at Rice University. Japanese, and, increasingly, Korean, tech and automobile companies have had success in the United States only after years of persistence, she said.

Marketing to U.S. consumers requires an understanding of the sociology of American shoppers, heavily influenced by the fantasy worlds of Madison Avenue and Hollywood, said Roger Kay, vice president for client computing at the research firm IDC.

Some Asian companies, he said, "don't want to deal with having to become a character or personality — their own star. It's not intuitive."

Indeed, Taiwanese tech companies have earned reputations for being sophisticated contract manufacturers that know how to drive down costs, but not as innovators with a flair for overseas marketing.

Since the end of 2000, Acer has transformed itself with a singular strategy: becoming a globally recognized name.

"The new Acer is pure sales marketing," said T.Y. Lay, Acer's president for international operations.

Acer, the world's fifth-largest PC maker, wants to become No. 3 within three years, Lay said.

To do that, it must compete in the United States.

"If you want to continue to compete with Dell in Europe or in Asia, you have to compete with Dell in the United States," said Rudi Schmidleithner, head of Acer's American operations, based in San Jose, Calif.

The Acer marketing company leading the charge in the United States recently promoted Gianfranco Lanci, an Italian who has headed the company's operations in Europe, as president, the first non-Asian to hold such a high-level position within the company.

And Acer put in place a "channel-only" strategy, which was successful in Europe. Acer sells only through distributors and retailers and does not sell directly to customers.

That strategy has worked well in Western Europe, where Acer is the No.1 seller of laptop computers, Lay said. It is designed to develop partnerships with distributors and retailers, who sometimes feel undercut by PC makers that also sell directly to consumers, he said.

"Acer believes it can't afford to wage an American-style marketing battle and create a costly "Hollywood image" brand, Schmidleithner said. Instead, its approach is to be patient and pragmatic.

Acer, which reported revenue of nearly $5 billion in 2003, expects just under $400 million in sales in the United States this year, Lay said. In 2005, the company, whose stock is traded in Taiwan, aims to increase that to as much as $1 billion in U.S. revenue.

Success in Europe, though, will not easily translate into sales in the United States, where American brands Dell, HP and IBM dominate. In Europe, all PC sellers are foreign companies, Kay notes.

Still, Acer's new strategy has not gone unnoticed.

"We are not going to take them lightly," said Mark Sanchez, vice president of the North American consumer business for HP, the world's No.2 PC maker. But Acer will struggle to become a household name, much as it did during its first U.S. foray, Sanchez said.