Pyrrhic victory
Taiwanese PC maker Acer has announced a 20 percent year-on-year drop in profits despite stealing market share from most of its rivals in the past year.
While a fall in profits was expected, given the exceptional economic environment, revenue was only down five percent and operating income was actually up by 12 percent. The half-yearly figures painted a similar picture.
This implies that the greater volume of products shipped came at the cost of reduced margins.
Acer's gains in market share have come largely due to an aggressive consumer mobile PC strategy. Acer has become the biggest seller of netbooks and consumers are increasingly looking to spend little more than £400 for a notebook. At these price points the margins are very low, which puts increasing pressure on manufacturers to shift high volumes.
Acer has extended this strategy by entering the smartphone market and is expected to complement its strong netbook position by being one of the first to jump on the smartbook bandwagon when they start appearing later this year.
