Acer: PC Industry Disappointed with Vista

In an interview with Financial Times Deutschland, the president of global #3 PC manufacturer Acer once again conveyed his overall disappointment with the lack of contribution he believes Microsoft's Windows Vista provides to PC sales. Though Gianfranco Lanci's comments were only briefly excerpted, for the first time, Lanci purported to speak not just for Acer but for his competitors as well, telling the paper, "Die gesamte Industrie ist enttäuscht über Windows Vista." ("The entire industry is disappointed with Windows Vista.")

Most likely, Lanci's comments were in Italian and translated into German. But a summary of his explanation by FTD points to two factors, the second being what he characterized as Vista's relative instability and lack of maturity. Lanci and other manufacturers had apparently hoped for a surge in sales comparable to what Windows XP and its predecessors provided.

Some independent analysts actually believe such a surge did take place, and also believe Acer was a principal benefactor. Last month, iSuppli estimated total PC shipments for Acer rose at a spellbinding annual rate of 45.8%, with over 4.2 million units sold in the first quarter of 2007. It still would have to more than double those shipments to catch up with global #2 supplier Dell, but Dell's shipments continue to decline, and could conceivably meet Acer halfway if this trend continues.

Overall, unit shipments among the world's top five producers grew at an annual rate of 8.7%. But that's actually a fairly nominal pace, if not just a little low, especially as unit growth for Lenovo and Toshiba slowed down. Nonetheless, PC industry growth actually has come in above many analysts' estimates this year.

Whether the whole industry is actually pointing fingers at Vista for the lack of a sales surge is unknown, though Acer indeed has not been alone in its stance. Nonetheless, Acer's executives have been naysayers since near the time Microsoft announced the Vista release delay last year.

Last October, the company's senior vice president, James Wong, accused Microsoft of actively scheming to provoke customers to upgrade their PCs, by under-equipping Vista Home Basic to give customers the impression their computers were under-equipped as well.

Then Lanci seized the baton, warning BusinessWeek readers last January, "Many years ago, when Microsoft announced a new operating system, there were people queuing in the streets. This time you will not see people queuing in the streets waiting for Vista."

An India Times story last April added Lanci's voice to the chorus of components manufacturers, including motherboard producers Asustek and Samsung, saying the demand surge they had expected to see in the first quarter never really materialized. In what might have been a poor translation from Italian to Hindi to English, Lanci was quoted as saying, "Vista has had no big help."

Financial analysts last year pointed to the fact that the key recipients of Acer's resurgence have been emerging markets, including the Middle East and Africa. There, PCs are often sold at lower costs; and to maintain margins, manufacturers who aren't interested in sacrificing quality opt to provide components that may be adequate, though not necessarily the state-of-the-art.

Acer's defense appears to be that Vista isn't really state-of-the-art anyway, and that not offering it in many markets isn't really a sacrifice.

In the US, however, Acer's marketing tells a very different story than its global executives. Its Web site currently boasts a headline reading, "Acer recommends Windows Vista Home Premium for Personal Computing."

Lanci's latest comments come a week after Microsoft's quarterly performance report, in which CFO Chris Liddell admitted to analysts that the sales mix of Vista to Windows XP was much more balanced than the company had estimated.

While Vista was forecast to account for 85% of Windows shipments in the previous quarter, it ended up accounting for only 78%. However, in another way of slicing the pie, the mix of premium OS to basic OS shipments shifted 17% over the prior year toward the premium side, Microsoft stated, due to higher demand for Vista Home Premium.

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