New Apps Key to Tablets Success, Shih Says

Stan Shih, chairman of Acer Inc., has been hailed as a visionary in the computer industry for bringing marketing and branding strategies to what has been traditionally a control-oriented manufacturing culture in Taiwan. Acer and its subsidiaries which once manufactured the computers, monitors, and motherboards, for many of the top US brands, is now one of the Top 10 brands in the United States. Acer, however, faces formidable competition abroad and in the United States. The companys latest push is with Tablet PCs, which have been met with initial skepticism. In a conversation with eWEEK Labs Director John Taschek at the Windows XP Tablet PC Edition roll out in New York last week, Shih revealed his initial concern as well as why he thinks Tablet PCs will be successful.

eWeek: Acer has been one of the leading proponents of Tablet PCs. How are they being received?

Shih: Its much better than expected. Initially there was some concern because it was a new technology. There is much interest in Asia. Thats been our experience in Taiwan. In the last two weeks we have heavily promoted it [the Tablet PCs] in Taiwan and in the U.S.

eWeek: How is the Tablet PC different from your earlier vision of the XC computer.

Shih: The XC is an application specific computer. The Tablet is general purpose—its an extension of the PC. It is a new platform that will create new opportunities. Its the first time there has been new innovation in the PC industry in a long time.

eWeek: Will Acer offer other models than the Travelmate 100?

Shih: There will be a range of products. They will appear in Q1 and Q2 and they will all be different.

eWeek: What are your projections of sales?

Shih: The Tablets will be 10-15 percent of notebook sales. The margins are the same for the Tablet PC and the notebook. Its a more powerful notebook. The key is for the manufacturer to manage its inventory. The Tablet will help. The first year may be slow. Three to five years later theyll [notebook computers] all have tablet functions because the costs will go down.

eWeek: How important is the Tablet PC in Asia?

Shih: In Asia, because most of the people do not use the keyboard, it will be important. With the tablet, theyll begin to use computers—especially CEOs and people over 40 who do not have experience with computers. Our job is to protect customer investment and to protect our investment. It may take some time to learn new things, but they could always use the notebook functions.

eWeek: How long has Acer been working on the Tablet PC? Shih: More than two years. One year ago we were demonstrating them. [In July, Acer had functionally complete working models.] We were waiting for Microsoft to release the operating system.

eWeek: What will drive Tablet PC sales?

Shih: The key will be to develop new software. The tablet PC will allow users to take advantage of a new paradigm. There is special interest in education, CAD, multimedia and learning/e-learning. In education, with the tablet PC, it brings a new experience. In the classroom, the user can take advantage of new applications, and even the teachers will use it as a powerful tool.

eWeek: Do you think Dell and IBM will enter the field.

Shih: From what Ive heard, theyre already there. Dell is already coming in.

eWeek: Will Acer make a big push in the US with the Tablet PC?

Shih: Before June, it was not very integrated. Acer has had to find a way to move from a manufacturing company to a services company. Asia has a culture of manufacturing. Acer saw good progress this year. In the past, Acer was profitable in Asia, break-even in Europe, and lost money in the US. Were focusing on marketing instead of manufacturing. Were going to commit more and more resources in the US.