ACER Inc., a multinational hardware and electronics company based in Taipei, sees a rosy outlook for the Philippine market, as the country continues to expand its economy coupled with the growing popularity of smartphones and other mobile devices here.
Jason Chen, the company’s global president and CEO, said this moved Acer to penetrate the Philippine smartphone market in the next couple of years, as it poses a big opportunity for growth.
“I feel excited—that’s actually an understatement—I feel thrilled. I’ve been studying about the Philippine economy and population in the past few days and I see a very big opportunity,” he said.
Chen explained that he wants to mimic the growth path that his firm saw in the personal computer (PC) industry in the past few years. Acer is the top supplier of PCs, specifically notebooks, in the past eight years.
“There is probably enough room for growth in the smartphone industry,” he said. “It is like a PC déjà vu from 20 years ago.”
Chen explained that in the 1990s, the PC industry’s three segments—the so-called premium brands, the middle segment and the “white-box” brands—were competing to serve the global market.
After a few years of stiff competition, firms that offer premium PCs left the market.
“I can pretty much predict that the so-called premium brands in the smartphone market would either exit or lower their prices. Either way is pretty hard. I could say that nobody would decide to exit, but if they keep their price, they will become a niche,” Chen said.
He pointed out that niche companies are optimized by a 35-percent gross margin, whereas his company is already satisfied with 10-percent profitability.
“Our business model is optimized by 10-percent profitability, and we are happy with that. We are driven to provide devices with very high specs at affordable prices,” the businessman, who served Intel for 14 years, stressed.
The secret to maintaining a good position in the market, Chen said, lies not only on the sales and the products, but also on the after-sales services.
“Acer has a brand that people can trust. We have service centers spread from developed to frontier markets. In the Philippines alone, we have 100 service centers, reaching Boracay and Palawan. These support infrastructure are what the white-brands lack,” the executive said.
Acer’s product range includes PCs, tablets, smartphones and wearables.
“We have to continue to grow our historical and successful PC business, and expand it beyond notebook, tablet, smartphone and wearables. The PC industry alone is not a growing segment, and some players will exit the market, leaving more opportunity for growth for Acer,” he said.
Just recently, Acer Philippines Inc. launched a series of smartphones aimed at capturing the low-end to high-end markets. The most recent mobile device to be released was the Acer Liquid Jade, which boasts of a 5-inch screen, a quadcore 1.3-GHz processor, a 13-megapixel camera and a very reliable battery.
Liquid Jade runs on Android 4.4 (KitKat).
“We have to look for a faster-growing segment—the tablet, specially the smartphone industry,” he explained.
In the Philippines smartphone penetration is at an average of 15 percent, but studies show that it will triple to more than 50 percent by 2015.
But the growth, studies said, would depend on two things: affordability and Internet connection.
Smartphone makers are competing in a market wherein more than a fifth of the population lives on a dollar a day. Hence, price is always a consideration for the Filipino market.
A stable and reliable Internet connection is likewise needed, as bulk of the applications that smartphones have to rely on the Internet to function. Currently, operators Philippine Long Distance Telephone Co. (PLDT) and Globe Telecom Inc. offer different plans for mobile browsing, which could go for as low as P25 for prepaid, and P999 for postpaid.
Art of War
CHEN said his company continues to apply the “cultural heritage” built by its founder Stan Shih.
“It means that we make sure that the technology we bring to people have the makings of a good device at a better price,” he said.
Chen started to head the Acer management in January 2014, a time when the company needed to raise its heads up and continue to fight despite the dwindling revenues brought about by struggling PC sales.
He said when he came in to lead the firm, people from the lower ranks of the company were downhearted.
“I can understand their anxiety, and then I asked myself: ‘How do we move forward?’ We need to get back to the basics,” Chen said.
Citing Chinese military strategist Sun Tzu, in his book Art of War, the businessman said the first step to reviving the spirits of his employees was to implant a vision.
“We need to have a vision that people would believe in. People in the upper ranks and the lower ranks need to share one vision so that they could attack together. The vision should be grand that people would be willing to ‘risk their life’ for it,” Chen said.
“Our vision was to expand our hardware and connect them together so overtime Acer will become a hardware, software and a service company,” he pointed out.
“War is the biggest thing for any nation, and when you lose a war, you lose a nation,” he said, referring to the firm’s war against the downtrend in its topline.
Chen then moved to reduce the operating expenses of the company, bringing the firm’s operational income for the first quarter to $4.2 million. In the second quarter alone, Acer’s operational income stood at $22 million.
Before joining Acer, Chen served at TSMC from 2005 as the vice president of TSMC Corporate Development. From 2008 he served as senior vice president of Worldwide Sales and Marketing.
Since taking the helm at Acer, the 53-year-old businessman has been named one of the “People to Watch in Asia in 2014” by The Wall Street Journal.