Acer needs years to catch up with smartphone rivals

Taipei: Acer Inc faces a learning curve with its move into smartphones and it may take years for the company to catch up with rivals including HTC Corp and Samsung Electronics Co in the market for Internet-capable handsets, analysts say.

"It takes time for the company to expand its scale in order for it to reduce costs to compete in this market," said Calvin Huang, who rates Acer "hold" at Daiwa Securities Group Inc in Taipei. "They're a late-comer."

Acer, the world's fastest-growing major computer maker by shipments, yesterday unveiled four handsets using Microsoft Corp's Windows operating system, the first models released since its acquisition of phone maker E-Ten Information Systems Co last year. Taipei-based Acer projected in April last year that handsets will account for 10 per cent of sales by 2011.

"I don't think they have much option left considering everyone is moving into phones, for example Apple with the iPhone," said Ellen Tseng, who rates Acer "buy" at Nomura Holdings Inc in Taipei. "It's a huge learning curve. I don't think they're going to match their global peers."

Acer lost 6.3 per cent to close Thursday at NT$43.90 (Dh4.7) on the Taiwan Stock Exchange, compared with a 2.2 per cent decline for the benchmark Taiex index. The stock has advanced 3.1 per cent this year, outperforming the Taiex's 2.2 per cent drop.

The release of the Aspire One low-cost Netbook last year helped Acer post a 31 per cent increase in computer shipments in the fourth quarter, the largest among the top five vendors and outpacing the 1.1 per cent growth for the overall industry, according to Gartner Inc

Nokia, the world's largest mobile-phone maker, had a 38.4 per cent market share in the fourth quarter, according to researcher Strategy Analytics. Samsung, the second biggest, said Tuesday it targets a 20 per cent share this year, compared with the 17.9 per cent Boston-based Strategy Analytics estimates it had in the three months ended December 31.

HTC, the world's largest supplier of Microsoft-based phones, forecasts its sales growth will slow to 10 per cent this year, after increasing 29 per cent in 2008. Acer bought E-Ten last year through a NT$9 billion share swap to expand into the market for handheld devices.

The "small" investment to enter the smartphone market and Acer's ability to cut costs by leveraging its computer business means the move will boost earnings, Tseng said.

"The line is getting blurred between notebooks and phones," she said. "Through their Netbook offering, they already have relationships with carriers such as T-Mobile, so they can work on cross-selling their smartphones."

T-Mobile, the wireless unit of Deutsche Telekom AG, began selling Acer's Aspire One for 1 euro in November as part of a two-year contract, replicating its business model for mobile-phone sales.