In 2007, Taiwan-based Acer made a strategic acquisition when it purchased US-based Gateway for $761.5 million. By virtue of this buyout, it also acquired eMachines. The following year, it acquired Packard Bell.
The Acer management positioned Acer and Packard Bell as “style-oriented” brands to counter the likes of HP, Dell and Lenovo (then IBM), while eMachines PCs were marketed as entry-level PCs. eMachines are priced 3-4 per cent lower than Acer brands while Gateway brands are 3-4 per cent higher than Acer PCs. Moreover, while Acer and eMachines are “pan-global” brands, Packard Bell is mostly sold in Europe.
The pricing strategy and geographic distribution appear to have paid dividends for Acer in India too. A couple of days ago, research firm Gartner revealed that Acer toppled HP in India to become the number two PC vendor in the April-June 2011 quarter. Dell with a 17 per cent market share held on to its first position, while Acer came second with a 12.1 per cent share. while Hewlett Packard (HP) with a market share of 11.2 dropped to third position.
“Our value proposition (read eMachines) has indeed helped us. Small- and medium-sized enterprises (SMEs) are seldom interested in the latest processors. Rather, they would purchase PCs that give them value for money,” asserts S Rajendran, Chief Marketing Officer, Acer India. eMachines alone added 7,000-8,000 PCs to Acer India’s overall unit shipments.
Price (or ‘value’ as Acer describes it) was a major factor. But there were other pushes too. Most of the growth (around 30-40 per cent) in Q2, 2011, for instance, came from the government (which typically gives orders (L1s) to the lowest bidder) and education (Sarva Shiksha Abhiyan and ‘Smart Class’ programmes by private education companies) verticals. “We consciously sold to these segments when the market started slowing down a couple of years ago. In hindsight, this was a good move,” says Rajendran, adding that sales to the SME segment and banking, financial services and insurance (BFSI) sector, too, have registered growth.
Acer has also managed to lower its “go-to-market” time by maintaining a ‘standard’ configuration (Rajendran calls it ‘Golden configuration’) for SMEs with an “upgrade option for picky users”. Thus the turnaround time for these units, typically shipped without DVD drives from its Pudicherry manufacting unit, is reduced. Simultaneously, it runs a ‘Select Partner’ programme, which entails around 150 small system integrators (SIs)—who “are engaged on a quarterly basis with mutually-acceptable deliverables”—for smaller cities.
More From This Section
And just because the enterprise front is doing well does not mean that Acer India is ignoring individual consumers. From this year, the company’s retail model includes Acer malls (exclusive stores), Acer points (multi-brands)—both of which are pan-India “and give a uniform retail experience to users”, according to Rajendran. These retail models typically serve the top 76 cities which account for almost 55 per cent of India's IT consumption.
For the remaining cities and towns, the company has an ‘Acer Outreach’programme. It has employed Acer associates who are “people that companies can engage with”, according to Rajendran who was inspired by the fast moving consumer goods (FMCG) sector. He also introduced a ‘Beat’ plan, whereby the associates would meet up with customers once in 15 days to talk about availability of products and support-related issues.
Over the last six months, Rajendran has developed a “localised market approach” wherein budgets are deployed at branch levels of Acer India, empowering branch managers to deploy below-the-line (BTL) activities to promote the brand. This could include hoardings and even events for “Acer galleries” (in-shops in smaller cities).
In the second quarter of 2011, shipments from Acer, Dell, HP and Lenovo—the top 4 vendors—represented 50.4 per cent of the market. Will Acer manage to keep, or improve, its lead?
Rajendran believes he can, but do analysts subscribe to this view? “India remains a price-sensitive market. However, besides price, what has also helped Acer’s growth in Q2, 2011, is the fact that HP has been busy with the realignment of its PC business,” says Vishal Tripathi, Principal Research Analyst at Gartner. HP, he explains, has realigned its distribution and channel network. “Though the process is over, HP will take some time to bounce back. It will take another three to four quarters for them to gain market share,” adds Tripathi.