Acer Wang Zhentang: Competition Is Far From Over

On April 29, 2010, Time magazine released its 2010 list of the world's 100 most influential people. Acer Chairman Wang Zhentang made the list, ranking second after Brazilian President Luiz Inacio Lula da Silva.

Mr. Wang did not travel to New York to receive the award, in keeping with his low-key style but underperforming his hustle, and precise leadership. Over the past four years, he has overseen Acer's rise from the world's fifth-largest PC vendor to the second-largest, behind HP. Wang is at the forefront of what Time describes as the rise of Asian companies over the next decade, increasingly focusing on the 'soft elements of business, such as marketing, design, and branding.

When Shih, the "godfather of Taiwanese IT", handed Acer to Mr. Wang six years ago, IT had gone from zero to $10bn in revenues and set out to become the world's top three PC makers. In the past few years, Wang Zhentang's immodest "sit five looks at three", "sit four looks at two", "sit two looks at one", one after another.

Today, the world map on the second floor of Acer headquarters shows more and more countries with the Acer No.1 logo: European countries, Thailand, Indonesia, Malaysia, Russia... It is hard to imagine that Acer, then on the brink of death, is now the world's No. 1 laptop and No. 2 PC. Last year, Acer's revenues surged 31.7 percent to T $462bn, making it Taiwan's top service company for the first time.

"Growth is so good, there is no way." In an interview, Acer Chairman Wang Zhentang rumbled with laughter as he talked about Acer's growth.

Catch up with Lenovo

Wang Chen-tang was born in 1954 in Changhua, Taiwan. He graduated from the Department of Electrical Engineering at National Taiwan University in 1976 and worked for Carlin Plastics and Taiwan General Equipment. He joined Acer in October 1981.

With A PRAGMATIC AND RESPONSIBLE WORK SPIRIT, HE STARTED HIS CAREER AS AN ELECTRONIC PARTS SALES ENGINEER AT THE GRASSROOTS LEVEL and HELD various positions such as SECTION DIRECTOR, VICE MANAGER, Manager, Associate manager, and VICE General Manager. In October 1990, he became the general manager of Acer Technology. In 1997, he was promoted to chairman and general manager of Acer Technology, and in 1998 he became full chairman of Acer Technology Group and chairman of its five subsidiaries.

In December 2000, Acer Group Chairman Shih Chen-wing launched the third transformation of the group, separating the contract manufacturing business from the brand business, and transferring the operational management of the Acer brand to Wang Chen-tang based on Wang Chen-tang's experience in running the brand successfully in China and Taiwan.

After he took over from Mr. Shih, the dotcom bubble burst in 2000 and the internationally focused Acer continued to lose market share outside China. At the time, Acer was mature in its own-brand and contract manufacturing sectors, but due to the uneven distribution of internal resources and business management constraints, Mr. Shih decided to separate Acer, BenQ, and Wistron into separate companies.

This created Acer's future, asset-light model. At the end of 2004, Shih handed over the REINS of Acer, which he had run for half his life, to Wang Zheng, the company's general manager, with the mission: to overtake Lenovo and become the world's top three in two to three years. Burdened with the mission of the new handsome Wang Zheng, the Acer brand began a new journey.

Lenovo's rapid growth has given Acer a second look at its rival. At this time, Lenovo has occupied first place in the Chinese market for eight consecutive years.

It is a common practice of Acer to find out where its rivals are weak and take advantage of them. At the time, Lenovo's main computer business was under fierce attack from Dell, and diversification was not successful. In 2004, Lenovo acquired the advantages of scale after acquiring IBM's PC, but it was once hampered by the problem of cultural integration after overseas acquisitions. Wang Zheng sees this.

2007 is the year of full-scale confrontation between Acer and Lenovo. When Lenovo tried to buy PC maker PackedBell, Acer swooped in for $45.8 million. In the same year, Acer bought Gateway, the third-largest PC brand in the US, for $710m.

Acer started its international journey as early as the 1980s. In the North American market in the 1990s, it completed three mergers and acquisitions and accumulated a lot of experience and overseas talents. Wang Zheng knows that the experience of international mergers and acquisitions integration, the ease of overseas marketing operations, and the asset-light model are temporarily beyond the reach of other competitors.

Lenovo, by contrast, has an integrated system with more than 23,000 employees. Acer, by contrast, operates in 70 countries, has 90,000 retail stores, and employs just 6,000 people. Acer's advantage is - pure brand operation, no factory model, and all production and channel outsourcing. The streamlined structure makes it easier for Acer to respond quickly and operate at low costs.

In 2007, Lenovo missed out on cultural integration and was overtaken by Acer. For the year, Acer sold 4.31 million units worldwide, giving it a 6.8 percent market share and moving up from fifth to third place.

It took Wang two years to fulfill his promise.

And dell

'It's the market change that gives Acer an opportunity: the financial crisis will make them the biggest winner in IT,' Mr. Wang said.

For a while, the recovery in the consumer market was not expected, and Acer's rivals - HP, Dell, Lenovo, and others - turned their attention to the enterprise business or server market. The prevailing view here is that the consumer market for computers is considered a dead end.

At the crossroads, every enterprise faces a new choice. Wang, however, remains committed to the consumer market and the smartphone platform. He judged that the enterprise market was too cold at 3C[short for Computer, Communication, and ConsumerElectronic]. In the era of convergence, the PC market will continue to be the major sales increment in the future.

In 2009, Acer shipped 30m laptops, more than its other three biggest rivals combined. "Competitors have not seen netbooks as their dominant product, and this will accelerate us to number one." "Mr. Wang said.

When Acer launched netbooks, global leader HP had no interest in netbooks, thin and light models, and was once considered a "poor man's compromise." Even Lenovo, which is at the forefront of China's consumer market, is missing out on netbooks. Acer seized the opportunity to ship. On November 24, 2009, Wang finally proved his judgment with $20 billion in company revenue, 10% netbook gross profit, and industry growth figures.

"Can you tell me which IT product in the world can grow at this rate?" Mr. Wang appears to have won, which he believes is one reason the company has overtaken Dell to become the world's second-largest PC maker.

Dell also admitted that Acer had won because "Dell's benefits from the recovery are limited" and that "the recovery in IT demand is mainly in the personal consumer sector, where only 20 percent of Dell's business is".

Gianfrank Lanci, Acer's global president, says that "without a good market share, you cannot guarantee profit margins." Acer's operating costs are 6.5 to 7 percent, compared with 12 to 13 percent for competitors, he said.

Wang Zheng predicted that 3C will have a $400 billion market, and communications and home appliances will converge into the 3C field. Against this backdrop, his vision for the future is $30bn in annual revenues.

In the third quarter of 2009, IDC reported that the top four PC manufacturers in the world were HP, Acer, Dell, and Lenovo, with market shares of 20.2%, 14%, 12.7%, and 8.9%, respectively. Race walker Acer, it's time for the final sprint.

The confrontation of HP

The Chinese market is Acer's Achilles' heel and a key battleground in its bid to become the world's biggest.

In contrast to Europe, the US, and South-East Asia, Acer's market share in China is just 8 percent, putting it in fifth place. It took many Chinese consumers almost two years to learn to pronounce AC-ER, Acer's English name.

'We haven't done more research in the Chinese market in the past, and there is a gap in brand positioning and design with local needs,' Mr. Wang said. Products do not conform to the Chinese aesthetic; have Little marketing input, and almost no advertising; Channel construction is poor, and it is difficult to find its shadow in the second and third-tier cities. So he set a goal for executives in China -- to be number three in the notebook market this year.

"In the past, Acer's product design was based on European and American aesthetic concepts. Europeans and Americans liked thick products because they thought they were strong, while Asians liked thin, beautiful shapes. Therefore, Acer's products were never favored by mainland Chinese." "Mr. Wang said.

In 2009, Wang Zhentang carefully built the China executive structure. After the resignation of former China CEO Tai-Yueh Lai in April, the Chinese management team of Acer was taken over by a German, followed by Zhang Yonghong, former vice president of HP's printing and Imaging Systems group in China, LG, and Sager.

In the past, Acer had pinned its hopes on big distributors to expand below the third tier, but had little success, Mr. Ahrens said. Now, Chang has been hired by HP as an executive vice president to fully copy HP's successful "grid" channel model of the past few years. Acer will then set up research and development centers in Shanghai and Beijing. The company has adjusted the distribution mode in the 3 ~ 6 level market, from the national general agent system used in the past to the regional general agent system.

In today's fierce PC competition, effective cost control, leverage to fight, and accurate prediction of the future, is the secret of Wang Zhentang's victory.

The "immodest" leader has made his opponents take him seriously, declaring that he was thinking of becoming No. 2 when he was No. 4, and then in the spring of 2008, when he became No. 3, saying he wanted to be No. 1 by 2011.

At Acer's annual conference earlier this year, more than 2,000 employees and guests enjoyed food and comedians on stage. An actor imitated Gianfranco Lanci, Acer's chief executive: "Lanci", wearing a tattered hat, mumbled in Italian before breaking into English and Shouting: "In my opinion, Acer is already the number one computer manufacturer in the world."

It seems to many that both Mr. Lanci and Wang Zheng, Acer's chairman, must be hoping that this line will soon become the company's official line. And once their 2010 dreams come true, Acer will usher in an era.

More recently, Mr. Wang was pleased that in the first quarter of 2010, Acer overtook HP for the first time to become the world's top laptop vendor with a 19.4 percent share of the global notebook market, according to Gartner. "But the competition is far from over," he said. In the first quarter, Acer outsold HP by only about 20,000 laptops, and HP won't be reconciled.