Acer passes Lenovo in Q1; next up: Dell

IDG News Service - TAIPEI - Acer Inc. achieved its top goal for 2007 early in the year, passing Lenovo Group Ltd. as the world's third-largest PC vendor in the first quarter. For the rest of the year, it plans to extend its lead over Lenovo, executives said Friday, putting it in position to challenge Dell Inc.

Moving ahead of Lenovo is more than a sales victory. It's also a vindication for Acer that its strategy of increasing sales through working with distributors and other partners in key markets is more effective than Lenovo's acquisition strategy. Lenovo has not managed to grow faster than its rivals since it bought IBM's PC division.

That's not to say Acer doesn't have some acquisition plans of its own. Acer executives said they are in talks to acquire a small PC vendor, but they wouldn't discuss which company except to say it is not Gateway Inc.

"We believe we can maintain the No. 3 position this year," said Gianfranco Lanci, Acer's president, at the company's first-quarter investors conference on Friday in Taipei. He said he expects to extend the lead over Lenovo as the year progresses.

Acer's share of the global PC market rose to 6.8% in the first quarter, up a blistering 46.1% over the same three months last year, according to figures from market research firm Gartner Inc. Lenovo's share was 6.3%, putting it in fourth place. Dell didn't turn in a stellar performance, either. Its market share dropped to 13.9% from 16.4% in the same quarter a year ago as unit sales declined 7.8%, cementing it in second place overall.

Acer executives also repeated their goal to increase PC shipments by 30% to 40% year-over-year in 2007. If the company can keep up its rapid growth, and if Dell fails to rekindle its sales, Acer will move into Dell's rearview mirror before long.

"We don't have a target date to challenge No. 2; it's still far off," said J.T. Wang, Acer's chairman. But he also said Acer will continue to put a major focus on expanding in the U.S. market, home to Dell and Acer's other main competitor, Hewlett-Packard Co. U.S. users will continue to see good prices from Acer, he said, and the company will continue to keep prices low to take market share in the U.S.

Acer's revenue rose 20% year-over-year in the first quarter to $99.5 billion New Taiwan dollars ($3.01 billion U.S. as of March 31, the end of the three-month period being reported). Net profit increased to $5.66 billion (New Taiwan) from $4.02 billion (New Taiwan) a year earlier.

Executives credited strong sales of its laptop PCs in the U.S., Europe and Asia for most of the gains, and said they are trying to increase sales of desktop PCs. Notebooks accounted for 62% of Acer's revenue in the first quarter, while desktops were only 17%.