Acer’s seven-inch Iconia Tab A100 tablet, which hit US shores earlier this month
Sixteen months following the original iPad launch back in April 2010, the Android camp has hit unexpected roadblocks as first tablets based on Google’s software fail to impress the mass consumer or gain any meaningful traction in the marketplace. Earlier this year heads rolled at companies that couldn’t produce a viable answer to Apple’s market-defining product, while nasty quotes from competitors only served to stress their jealousy. Computer maker Acer is a typical example. Their former CEO and president Gianfranco Lanci was forced to quit his post abruptly in the wake of the iPad challenge as the company outlined reorganization plans.
Today, the Acer Group posted preliminary results and the numbers don’t look good. They suffered a quarterly operating loss of NT$7.1 billion (about $246 million) – Acer’s first-ever quarterly loss – and a 32 percent annual drop in consolidated revenues of NT$102.1 billion, or about $3.5 billion. Three hundred jobs will be cut in Europe and the company will take a $150 million hit to write off inventory and doubtful payments in Europe. Acer shares fell a whopping 65 percent this year in a broader market down 16.4 percent. Also, they have no compelling products in sight in the run-up to the holiday quarter. It gets worse, chairman JT Wang tells Guardian:
Today I have to say, trying to break even this year becomes impossible.
Why poor results? As mentioned earlier, Acer had to swallow significant costs attributed to company-wide reorganization and clearing up excessive inventory. The latter is in line with other makers reducing prices of Android tablets in order to “digest inventory overstock”. Interestingly, Acer will no longer report sell-in, which only includes shipments to the channel, and will instead switch to the sell-through model which counts actual sales to end users.
This is what the post-PC world ranking looks like today, if you count tablets as PCs
The discrepancy between shipments and actual sales became painfully evident when Samsung vice president Lee Young-hee in January praised the two million units sell-in of their inaugural tablet, the seven-inch Galaxy Tab, but later admitted to seeing a much smaller sell-through. Too many market surveys also fail to make the clear distinction between sell-in and sell-through. As a result, some surveys paint a rosy picture of Android slates accounting for as much as one third of all tablets sold. This led to a favorite Silicon Valley joke, first coined by Instapaper’s Marco Armenti, that there is no tablet market, only an iPad market (some beg to differ).
Apple’s tablet did nuke netbooks from orbit, a market in which Acer thrived. The Iconia Tab A100, the first seven-inch Honeycomb tablet, hit US shores earlier this month at a time when Apple is readying the third-generation iPad. Acer isn’t alone feeling the heat in the post-PC world. The tech world was shocked to learn about Google’s intentions to purchase Motorola Mobility’s money-losing business for $12.5 billion. Last week brought more unexpected news when the world’s leading computer maker Hewlett-Packard quit hardware business.
This has left Dell and Apple as the only two computer makers from America. Situation is about to get worse as HP unloads its computer inventory in another fire-sale maneuver which is likely to ignite fierce PC price competition in the Christmas quarter. While consumers will jump with joy, price wars could have far-reaching consequences due to the razor-sharp margin nature of the low-cost, high-volume PC biz. Apple is a notable exception: They own the lucrative $1,000+ segment of the market. In the June quarter, Apple grew Mac sales 14.6 percent worldwide versus the industry average of 2.7 percent, marking the 21st consecutive quarter in which Mac shipments growth outpaced the entire PC market. As of late, rumors are swirling that Samsung could acquire HP’s computer business in an effort to become the world’s leading PC maker.Whichever way you look at it, we surely live in interesting times. Stay tuned.
Apple followed-up on the original iPad launch with this evocative iPad commercial attempting to explain why people needed tablets in the first place. Watch it on YouTube.