Acer Prepares for Apple's Tablet

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    Via Businessweek:

    Count Acer (2353:TT) Chairman J.T. Wang among the many people in the tech world awaiting the debut of Apple's (AAPL) new tablet computer. "I'm eager to see what Apple has done," says Wang, the top executive at Acer, the world's second-largest PC vendor behind Hewlett-Packard (HPQ). Wang and his Acer colleagues have some guesses about what the tablet, which Apple is scheduled to unveil on Jan.27, will be like. "It's going to be a big-screen iPhone," he predicts. "The content can be bigger, more graphic, with more video and text, but they are going to duplicate a successful model."

    Wang has another reason to focus on what Steve Jobs & Co. are about to launch. If things had worked out differently almost a decade ago, the company leading the tablet wave might have been Acer, not Apple. Long before Apple began its tablet project, the Taiwanese company was a tablet leader, working with Microsoft (MSFT) to produce a first-generation tablet computer in 2002. Other computer companies such as Dell (DELL) and IBM (IBM), skeptical about whether computer users would want a new type of machine, wouldn't commit to making the tablet. Not Acer, which embraced the new gadget. Indeed, even before Microsoft engineers had finished working on the tablet software, Bill Gates would carry an Acer tablet PC everywhere around the office.

    Being a tablet pioneer, though, didn't work out well for Acer. The product had impressive technology for its time, such as handwriting-recognition software, but consumers didn't much care. Moreover, Wang says, Acer had to cope with internal problems at Microsoft, where outgoing CEO Gates and incoming boss Steve Ballmer disagreed about the project's importance. "At the time, Bill Gates wanted to do that [tablet]," says Wang. "Steve Ballmer didn't care." As a result, "they didn't put in the resources to make it successful." After a year, Wang says, he pulled the plug.
    "We Don't Have to Be the First"

    Just in case he needs a reminder of the high hopes Acer had for the tablet, Wang keeps behind his desk at Acer headquarters in suburban Taipei a framed page from a local Chinese-language newspaper. One article is about Wang predicting a revival for Acer's PC business, which had been struggling. The other has the headline "Cooperation with Microsoft: Tablet PC Launch in November."

    With Apple generating so much buzz, do Acer executives have any regrets about not sticking with a category that now could revolutionize the computer and consumer electronics industries? Wang says no, he and his colleagues "learned a lot" from the episode. Among the most important lessons: Unlike Apple, a company like Acer isn't cut out for taking the lead in establishing a whole new category. When it comes to launching new products, "we don't have to be the first," he says. "We can be No. 2. It's O.K. with us."

    Acer's culture isn't suited for being out in front, adds Jim Wong, president of Acer's IT products division. "I don't compare Acer with Apple," he says. "Apple is a company that is highly innovative. Acer is more [focused on] leveraging resources from the whole industry. That's Acer's way." For instance, Acer's Taiwanese rival Asustek (2357:TT) was the first to score with netbooks, the small, inexpensive laptops it began selling in 2007. Acer followed, once it could see that consumers liked the new type of computers. Acer now dominates the netbook market.
    New Tablet in the Works

    That doesn't mean Acer is going to stay on the sidelines now that Apple is reinvigorating the tablet computer category. Acer last year launched a laptop computer with a touchscreen that Wong says is a first step toward a new, tablet-like device. "Following this concept, you can expect to see more things happen within 2010," he says.

    Unlike the device that Acer expects Apple to launch, whatever the Taiwanese company introduces this year will maintain some of the basic features of traditional computers. "I don't think we would like to get rid of the keyboard," says Wong. "People still type faster than they write." The goal is to have products with parts that are detachable. "If you need a keyboard, you'll have it," says Wong. "If you don't, you still can have a slate."

    The new device will be part of a broader push by Acer to diversify beyond its core laptop-PC business. Acer last year passed Dell to become the world's No. 2 computer vendor, thanks largely to the Taiwanese company's strength in netbooks and other laptop PCs. Already, Acer has begun selling smartphones and plans to introduce an electronic book reader this year. The company is also going to launch an online applications store, Wong says.

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