Acer chief spells out acquisition rationale

Acer's efforts to grasp market share from the clutches of competitors such as HP, Dell and Lenovo recently received a major boost when it captured PC vendor Gateway in a move that has subsequently led to it exercising the rights to snap up Packard Bell as well.

However, with both Gateway and Packard Bell hardly standing out as seasoned names in the Middle East, there are many in the region who have been wondering if the latest example of global hardware consolidation will have any impact locally.

Gianfranco Lanci, president at Acer and a man with a solid understanding of what makes the EMEA market tick having led the vendor's regional operations for a substantial period, told Channel Middle East there would be a role for the brands that Acer has just purchased, but was unable to say precisely what that would be.

Lanci says the vendor is deploying a team to manage the integration of the pair and upon completion of that process a decision will be made on how to exploit the best assets of each party. "We have 40 people working on the integration of the companies with Acer, and we are running a post-merger management programme to seize the best practices from Gateway and Packard Bell," he explained. "The companies have very many good elements about them and we want to use their expertise and translate it into markets where they are not already present, such as the Middle East, Africa, Asia Pacific and the Far East," revealed Lanci.

According to the head honcho, Acer has built a name for itself through being a price competitive brand. He claims the vendor has secured a commanding position by focusing on increasing output to take advantage of economies of scale, allowing it to generate more attractive revenues and offer an appealing price proposition to customers. Lanci now hopes the vendor's recent acquisitions will shape its ability to build on past successes.

Acer currently occupies the silver medal position in the EMEA PC market, but leads the pack with 20% market share when it comes to notebooks after second quarter sales climbed 38% year-on-year.

The vendor has also revealed that EMEA comprises more than 50% of its global revenues these days, citing the Middle East as a key market that supports the growth of the wider region.

But while double-digit unit growth and quarterly market share hikes are all well and good, Lanci is smart enough to realise that the strength of a company's bottom line is what really matters and admits that profitability is one of the main issues on his agenda. Lamenting the margins that PC manufacturers earn, he reckons that the profit made in the industry is concentrated into the hands of too few brands. Lanci doesn't go as far as naming the likes of Intel and Microsoft, but he believes that trends such as rising open source adoption will eventually see profits divided between more parties.

"Profitability is a problem. Ours is the only industry where you make margins of 3% or 4% and are happy with that," he said. "Profit is only being made by a few companies in the industry and this needs to change and I believe it will."

Resellers in the region will relate to Lanci's concerns although the man himself is unable to provide few words of comfort for channel partners. He suggests the most effective step that resellers can take to bolster profitability is to focus on improving their cost structure and efficiency.

"I don't think margins are going to increase, I've never seen the margins increase in this industry - it will remain very thin," said Lanci. "In my opinion, the only possibility for the channel is to improve efficiency and reduce cost to improve profitability. The reseller has to look at its business model and review its cost structure. But also a business model that provides only IT services to customers will not survive either. Services can only be an addition, but they need to have everything," he concluded.