Acer to Expand Android, Chromebook Offerings

Eva Dou and Aries Poon, The Wall Street Journal:

Taiwanese personal computer maker Acer Inc. said it plans to offer fewer Microsoft Inc. products and more Chromebooks and Android-based mobile devices, after it posted a surprise second-quarter loss on lower sales and rising expenses.

“We are trying to grow our non-Windows business as soon as possible,” President Jim Wang told investors in a conference call. “Android is very popular in smartphones and dominant in tablets… I also see a new market there for Chromebooks.”

John Gruber comments:

Speaking of red flags, there’s one for Microsoft — partners trying to move away from Windows “as soon as possible”. The collapse of Windows is going to happen faster than you think.

There are some who think Microsoft will continue to be as dominant as it has been in operating system software since the introduction of the original IBM PC. Then there are those who are at the other end of the spectrum who think Microsoft’s Windows business will become no more and rather quickly. Gruber’s comment would be accurate only for those in and around the first group, but not so much for the rest. Let’s look at some numbers to add some meat to the discussion.

IDC announced preliminary worldwide PC shipment numbers for the second quarter of 2013. The big news was Lenovo overtook HP for the number one spot. Note IDC doesn’t include tablets such as Apple’s iPad in its definition of PC. Here is the shipment share breakdown for Q2’13:

  1. Lenovo: 12.6M units, 16.7% share, -1.4% Y/Y
  2. HP: 12.4M, 16.4%, -7.7%
  3. Dell: 9.2M, 12.2%, -4.2%
  4. Acer: 6.2M, 8.2%, -32.6%
  5. ASUS: 4.6M, 6.1%, -21.1%

And then there’s the Others category with 30.6M units shipped, capturing 40.4% market share, and declining 11.2% Y/Y in Q2’13.

The top five brands all experienced Y/Y declines, but what is noteworthy is Acer’s spectacular Y/Y decline compared to Q2’12: -32.6%. Acer president Jim Wang is in hot water and as anyone in his situation would do he made strong statements to get himself out. But we all know it is not easy—in fact it is almost impossible—for a large corporation like Acer to swiftly change directions. If Wang is successful we can expect Acer’s market share to significantly fall in IDC’s Q3’12 worldwide PC shipment report. I don’t think it will happen; if I were a betting man, I predict Acer will maintain its #4 position in Q3’12.

Let’s get back to Gruber’s comment. Although some might think Acer growing its non-Windows business as soon as possible is not the same as Acer trying to move away from Windows as soon as possible, we have to remember companies do not have unlimited resources. If Acer decides to grow its non-Windows business as soon as possible it necessarily means it is moving away from its Windows business just as quickly.

Even if Acer is able to quickly move away from Windows it wouldn’t be a big red flag. Acer’s market share of PC shipments is 8.2%. If we assume Acer completely shuts down its operations for manufacturing Windows-based PCs, Microsoft’s ‘collapse’ would only result in a hole that’s 8.2% big. That’s a big dent, but it’s not a collapse. If one of the really big guys like Lenovo, HP, or Dell made a similar statement, now that would be something else.

The bottom line is this: I don’t think Acer can quickly shift away from Windows to Android and Chrome OS. And even if it did it wouldn’t result in the collapse of Microsoft Windows.