Books & Review | Cole Garner Hill
Updated: Nov 12, 2012 01:17 PM EST

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According to Scott Lin, president of Acer Greater China the rapid growth of the tablet and smartphone markets has been hitting the margins of PC makers. (Photo : Reuters)

Following the release of high revenue figures from Apple and Samsung, and the hugely successful launch of Microsoft's Surface RT tablet, Taiwan personal computer company Acer is paying close attention to the high-end consumer market. Company executives think Windows 8 may be "the last chance" Acer has of getting back on track, The China Daily reports.

According to Scott Lin, president of Acer Greater China the rapid growth of the tablet and smartphone markets has been hitting the margins of PC makers.

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"Although customers were spending the same amount of money on electronic products, iPads and smartphones have taken most of their budget," Lin said.

Oct. 22, Acer reported third-quarter net profits of NT$68 million ($2.3 million), well below analysts' estimates.

From the looks of it, it's a trend that is only continuing to worsen worldwide. The world's largest chipmaker, Intel Corp, expected the PC business to grow at only about half the normal seasonal rate in the fourth quarter because of the "passive economic outlook." Worldwide PC shipments reportedly fell more than 8 percent in the third quarter  -compared with a year earlier  - to 87.5 million, the biggest decline since 2001, research firm Gartner Group reported.

Acer hopes to permeate the market further by partnering with more online sales sites.

"We will cooperate with e-commerce websites but not implement a price war," said Zhang Yonghong, executive vice-president of Acer Greater China.

By the end of 2013 Acer hopes to have about 30 percent of the global ultrabook market. The company thinks much its future sucess depends on the sucess of Windows 8, which Acer is already heralding as revolutionary.

"I am sure that Acer will be back on track by next year, meaning we will report a better revenue result," said Lin.

"We value Windows 8 because of its strong cross-platform ability," said Zhang. "Acer will be able to produce all kinds of products that run the same operating system. Our customers will find it's convenient to connect the different platforms."

Acer now finds itself in a unique position. The Taiwan company is still partnered with Microsoft for its Windows 8 operating system. Microsoft is now directly competing against the Acer in the high-end market though, with the recent debut of its Surface RT tablet, and impending debut of its bigger brother, the Surface Pro. Acer is finding a hard time striking a balance between friendly rivalry and desperately needing Microsoft for its Windows 8 OS.

"It requires a lot effort for a software company to introduce hardware products," said Lin. "But in the long run, Surface is set to lift Windows' presence in the tablet market, which is good news for Acer."

That's a far cry from the blunt warnings Acer executives were issuing Microsoft following the Surface tablet's debut.

In an interview with Tencent Technology, Acer executive Lin Xianlang unleashed a cautionary barb for partner Microsoft, suggesting the company stick to software, and leave hardware manufacturing to other companies. Xianlang compared hardware manufacturing to "hard rice," speculating that Microsoft might find it extremely difficult to eat, according to a translation from CNET.

Of course, the hardware in question here is the Microsoft Surface tablet, a direct rival to Acer-made Windows 8 tablets like the Iconia.

Acer has plenty of reasons to worry about the future success of Microsoft's Surface. The company has posted steep declines in recent quarters, with its global shipments falling 10 percent year over year in the third quarter, according to research firm Gartner, and its shipments in the U.S. have fallen 28 percent over the same period.

As Engadget points out, though, "Microsoft's tablet has been boiled and salted just right, which might be the real reason Acer is so averse to it."

Indeed, the Surface looks to have begun successfully permeating pop-culture and public awareness beyond Microsoft-devotees and gadget-heads. Even Oprah Winfrey is a confirmed fan of the device. The former talk-show host added the Surface to O Magazine's "Favorite Things of 2012" list.

This isn't the first time we've heard anxiety about the Surface from Acer. Back in August, Acer CEO JT Wang told the Financial Times that Microsoft's plans to launch its own tablet in October would be a "negative for the worldwide ecosystem" in computing and beg the software giant to rethink the move.

"We have said think it over. Think twice," Wang said. "It will create a huge negative impact for the ecosystem and other brands may take a negative reaction. It is not something you are good at so please think twice."

Wang continued, suggesting that if Microsoft moved ahead with its tablet plans, Acer might replace the software giant as a partner.

"If Microsoft is going to do hardware business, what should we do? Should we still rely on Microsoft, or should we find other alternatives?" he is quoted as saying.

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