Channel clarity

Acer has achieved rapid growth in the Middle East during 2004. With a global management reshuffle in the pipeline and plans to expand its product range even further, Emanuele Accolla, VP at Acer EMEA explains the path ahead

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By  Stuart Wilson Published  September 24, 2004

Shih to step down|~|Stan-Shih_ACER.gif|~|Stan Shih, chairman and CEO at Acer|~|The retirement of chairman and CEO Stan Shih at the end of 2004 will mark the end of an era for Taiwan-based PC and notebook giant Acer. Shih took the momentous decision to split the Acer Group into three divisions creating BenQ, Wistron and Acer.

Rapid growth in the notebook space has seen Acer challenge the incumbent market leaders. With Acer's top management being reshuffled at the end of the year, the vendor now needs to prove that it can maintain its market momentum and successfully expand its product portfolio. Emanuele Accolla, vice president EMEA at Acer Computer explained just how the company plans to keep its foot on the accelerator.
||**||Channel strategy|~|eman200first.gif|~|Emanuele Accolla, vice president EMEA at Acer Computer |~|CME: What is the approach to corporate sales and consumer sales in the Middle East region for Acer. Can you approach it the same way as Europe?

EMANUELE ACCOLLA: In Europe you see some corporate dealers really specialize on dealing with these accounts. In some countries we do good activity with corporates, in some we do some modest activity; in some others we don’t do any activity yet. But in the countries where we do good corporate activity what we do from one side is have our people in the field that are interacting day-by-day with corporate technical officers and procurement teams facilitating the acceptance of Acer products. It is not just getting the approval; you also need to provide financial services, ease of delivery and flexibility — a lot of things that corporate customers require. We are not equipped to provide them because we work with the channel. We serve specialised corporate deals and the channel provides fulfillment and installation and the other needs they have. There is a mutual trust in the joint activity in pushing to certain quarters. In the Middle East, it might be different country-by-country and corporate for us today, frankly speaking, is mostly some business in the education field. Even in those cases we make the push, but the ability to penetrate corporates is largely in the hands of our partners. We do some direct activity that complements what they are doing by selling the value that you are providing. The difference is that in Europe, for certain reasons, the market is more open than it is in the Middle East. We have a reasonably good set of partners in certain countries like Saudi Arabia, UAE, Bahrain, Kuwait and Oman. We are lacking some activity maybe in Egypt and certain other countries.

CME: In terms of developing your distribution channel, you’ve just appointed Empa in Central Asia and Almasa in Northern Africa. How do you see your distribution channel evolving in the Middle East to serve emerging markets?

EA: When you look at Europe it would be too easy to say now that the Middle East will replicate what happened in Europe. I don’t think that is so automatic. The reason behind this is the existence of borders in the Middle East and how easy it will be to remove these in the near future. In Europe, a lot of things changed in the last ten years because of the single market and the same price because of the same currency. Several distributors have been forced to merge because of tough competition among them to become more efficient. So the cost of distribution has dramatically reduced in Europe and at the same time there are some new start-ups able to specialize in certain activities because they have a very large market to play in — not just one country. In the Middle East you have a very different picture. It is more similar to Europe 15 years ago when every country worked on its own and crossing the border was difficult for goods and people. With that situation, I think there is a limit to improving the efficiency the way we have seen it improve in Europe. It means that local distributors country-by-country still have a lot of value compared to multinational distributors. Why? Because multinational distributors will have to deal eventually with crossing the border. In Europe, it is a different story. Goods don’t cross the border because borders don’t exist and that makes a significant difference.

CME: How do you differentiate between the value provided by distributors using Dubai as a hub and those actually re-exporting using sub-distributors?

EA: Let me tell you something. Those distributors only sitting in Dubai and sub-distributing to somebody else, they are vital for components and relatively good for ‘no brand’ vendors, but within our global business proposition, distribution is an important element but it is not the only element. We are playing with a mix: product, price, channel-to-market, brand and so many other elements. We are the hub in Dubai because we have our own Jebel Ali assembly facility. It doesn’t make any big difference to us whether we give the goods to a distributor close to us or to a partner sitting in any other country. If the partner is sufficiently large we can deal with them and it makes sense. If the partner is not, he can get a better deal through a distributor because we are not equipped to deliver small amounts. So the local distributor re-exporting is good for us as a complement to our core activity. It is just a complement though and we cannot entirely rely on them to reach the big guys in-country. At the same time, we cannot rely only on us to reach the smaller partners. They are very good for dealing with some small countries and small markets.

CME: North Africa is being served from both the Middle East and North Africa. How do these two channels work in parallel?

EA: It doesn’t matter where the goods come from; they are all accounted for in Acer Middle East’s books. If we have to ship desktop PCs to Tunisia, it is not effective to assemble them in Dubai when we can assemble in Europe and move PCs by sea in 24 hours. We ship out of Europe but invoice out of the Middle East and this is transparent to us. So we do what is the most efficient. The system can invoice out of the Middle East automatically.

CME: What is the strategy for Iraq?

EA: We have some contacts and some people distributing already in Iraq. Today, it is too early to really be strategic about it.

CME: You now plan to expand into digital cameras later this year. How will you have to evolve the channel?

EA: I think that we are dealing already with different types of partners. In certain countries where we have a solid presence in retail, the market is well developed and individuals have sufficient spending power, we will address those countries and those channels. In some of the central Africa countries, we will not even try to address those markets. Those are suitable for some notebook and desktop models and that is it. It makes no sense selling other products if the market is not receptive.

CME: Why have you decided to start selling digital cameras? It is a very crowded market place already.

EA: It is complementing some of the activities we do for the e-home. Apart from that, we are very much looking at developing the brand so everything that is sufficiently technological and fits with our image helps us. Cameras will not disturb that brand development. They will also give some contribution in the captive side of the market that we can drive. We are not going to fight with Nikon and Olympus in cameras, but we think it can easily complement our notebook series. The same applies for networking components and little devices that we are adding. We have a channel-to-market, and marketing many different devices helps to gain the confidence of the customers. If we can provide the notebooks why should we not also provide the lower technology-content products?
||**||Staying competitive|~|ferrari200.gif|~|Product tie-ins with globally renowned companies such as Ferrari aim to strengthen Acer's own brand equity|~|CME: You must enjoy looking at IDC’s Middle East unit shipment figures. What is the secret of Acer’s success in the region?

EA: The secret is a very clear strategy, very good people and dedication. We have been pushing forward since the beginning. We are not doing too many things but those that we do we want to do right. We are one of the very few companies that is very consistent. What we promise to do — especially with the channels — we really do. In this respect I think we have a record that is second to none. We see several other companies promising to do something and then doing something else. Whatever we promised we did. The model is indirect and we stick to the model.

CME: Do you expect to take the number one position for PC and notebook shipments in the Middle East and Africa?

EA: I think today HP is still very strong in PCs globally. When we talk about notebooks, we are not yet number one. We have demonstrated that we can be number one and we can get into that position sooner or later and we are pushing strongly. In certain regions like the UAE and Saudi Arabia, we have managed to be number one. Globally, I don’t see the possibility in the very short-term to be number one. We do not want to be one; we see HP there. We want to get what we can while still making reasonable money because the bottom line is very important. We only lead on the PC in the products that we market and don’t have other product lines eventually subsidising the PCs, so we have to make money out of it.

CME: How can you compete on price if other vendors cross-subsidise between business units to discount the PC cost?

EA: Losing money is something that it is possible to do for some time but not forever. Some people have been losing money for too long. It is not a matter of losing money or making money; it is about being efficient. We have demonstrated that with the right strategy we can be efficient. The ones that have been losing money does not include Dell. It never lost money because it has a very clear model. We are the only one in addition to them with a very clear model that is not replicating Dell. The ones that are doing something else like they are doing now, we can be more efficient than them, make money and gain market share. Expanding the product portfolio does not mean growing the number of people too much.
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