Acer Creates 2 Major Business Groups for PCs, Cloud

The company separates its traditional PC and display business from its efforts around newer markets like cloud services, smartphones and IoT.

Acer PC

Acer, which continues to get battered by the shrinking global PC market, is restructuring as company officials look to separate the hardware units from Acer's cloud services and smart devices efforts.

Acer has divided its businesses into two groups, one that will focus on notebooks, desktop PCs and tablets, and the other that will include cloud services and platforms, smartphones and wearable devices that include Internet of things (IoT) applications.

The company began operating under the new structure—Core Business for the PCs and New Business for the cloud, smartphones and IoT—March 25, a day after it was announced, and a day after Acer officials unveiled the PC vendor's full-year 2015 numbers. According to the company, Acer in 2015 generated $7.98 billion in revenue, down 20 percent over 2014. Net income came in at $18.3 million.

Acer, like other PC and component makers, has been hit by the contraction in the worldwide PC market since 2012, when smartphones and tablets began taking a larger share of consumer and business tech investments and as PC users began holding onto their systems longer. In 2015, the number of PC shipments worldwide declined by 8 percent to almost 10 percent year-over-year, according to numbers from analyst firms IDC and Gartner. IDC analysts said it was the first time since 2008 that the overall number of systems shipped fell below 300 million for the year.

Gartner ranked Acer as the world's sixth-largest PC vendor, shipping about 20,340 PCs for 7 percent of the market (just behind Asus, at 7.3 percent, and Apple, at 7.2 percent). Overall, Acer saw the number of PCs it shipped in 2015 fall 15.3 percent over 2014.

IDC analysts said they expect the global PC market to continue shrinking through 2016, though it could stabilize next year with competition from other devices softening and more new systems and form factors coming to market running Microsoft's Windows 10 operating system and powered by Intel's latest "Skylake" processors.

As the PC market has shrunk, Acer's future has been debated. An IDC analyst in November 2015 predicted that the PC market would consolidate over the next two years, with the top four vendors—Lenovo, HP Inc., Dell and Apple—continuing to grow share. Two of the next six vendors—which would be Acer, Asus, Toshiba, Samsung, Tsinghua TongFang and Fujitsu—would drop out of the market, he said.

The prediction was met with sharp pushback from officials at Acer and Asus. Acer founder Stan Shih days later told journalists that the company is facing continued competition and was looking to restructure, but that the intent was to make the PC business leaner and more efficient.

"Acer will not by any means exit from the market," Shih said, according to reports.

Like other PC OEMs, Acer has been growing its product portfolio to expand into new areas, including the cloud (through its BYOC, or "bring-your-own-cloud," efforts) and the IoT. According to Acer officials, the new Core Business unit will include not only notebooks, desktops and tablets, but also R&D, digital displays, server products and corporate business planning operations.

The New Business umbrella will include BYOYC and Smart Products Business, such as cloud services, smartphones, wearables devices, e-business and Acer's Value Lab, for integrating technologies for new businesses.

The restructuring to separate the PC business from other units echoes of the decision by Hewlett-Packard officials to break the company into two separate public corporations. The split, which occurred in November 2015, created Hewlett Packard Enterprise, which is focused on enterprise IT solutions and services, and HP Inc., which houses the PC and printer units.

That contrasts with Dell and Lenovo, whose executives see their PCs as central to their larger IT enterprise aspirations.