Acer to Launch Smaller 8-inch Windows Tablet in June

   By Eva Dou 
 

TAIPEI--Acer Inc. (2353.TW) plans to launch a smaller 8-inch Windows tablet next month, the first confirmed device from a Microsoft Corp. (MSFT) hardware partner that will compete directly against smaller tablets from Google Inc. and Apple Inc.

Microsoft said last month its hardware partners will launch smaller Windows 8 devices in coming months. The software giant is also planning its own brand 7-inch tablet, people familiar with the matter told The Wall Street Journal in April.

Microsoft's new touch-controlled operating system Windows 8 marks a radical overhaul, but has so far seen low penetration rate, partly due to the high price of the devices.

The new Acer tablet has not been launched officially but a product listing was briefly leaked on Amazon.com last week before being removed. An Acer executive who declined to be named confirmed the tablet is on the way but didn't elaborate on the device's features.

Acer, the world's fourth-largest PC maker by shipments, was one of Microsoft's most vocal critics last fall, when the software giant began competing with its hardware partners through the launch of its own brand Surface tablet.

The Taiwanese PC firm has recently turned more optimistic about its long-time software partner, with hopes that this year's Windows 8 devices will help it recover from two consecutive years of full-year net losses. But the global environment remains challenging, with PC demand in steep decline.

Acer also said Tuesday its first-quarter net profit rose from a year earlier on foreign exchange and stock disposal gains, although its operating margin sank to a razor-thin 0.03% amid market-share loss to competitors like Lenovo Group Ltd. Its operating margin hasn't surpassed 1% in two years.

The company last year began efforts to shed its image as a maker of low-end devices, putting more efforts into design and hiring a new chief marketing officer. Acer president Jim Wong said in March that the company will double its percentage of revenue spent on marketing and research this year.

But analysts say Acer's high-end products so far haven't been hot sellers because the Acer brand can't command such a premium.

"Their product design has improved a lot, but the price of some of their devices were too high last year," said Yuanta Securities analyst Vincent Chen. "Their brand image is still not that attractive."

The company is looking toward low-cost tablets to help it boost shipments this year, Mr. Wong said in March.

Acer reported a first-quarter net profit of 515 million New Taiwan dollars (US$17.4 million) with foreign exchange and stock disposal gains boosting its nonoperating income. A year earlier, it posted net profit of NT$331 million.

Revenue fell 18.6% to NT$91.97 billion from NT$113.04 billion a year earlier, the company said.

Acer will disclose details of its first-quarter earnings at an investor conference Wednesday.

Due to a change accounting rules, some previously reported figures will be revised, the company said, without disclosing figures.

Write to Eva Dou at [e-mail]

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