Acer Execs Admit Innovator's Dilemma, Question How Long Apple Remains Apple

Not long ago, at the W Hotel in New York's Union Square, a group of dark-suited Acer executives stood cramped together in their suite, showing off the company's latest notebooks, desktops, tablets, and hybrid PCs. The reason for the occasion? The launch of Windows 8, Microsoft's new operating system, which hardware makers like Acer believe will give them a fighting chance against Apple in the mobile market.

For decades, hardware manufacturers (often called OEMs) have built huge PC businesses on the back of Microsoft, which provided the companies with software. But that model has radically evolved in recent years: Apple, which controls both its hardware and software, was able to advance toward (and dominate) new industry paradigms—music players, smartphones, tablets. OEMs, dependent on third-party software makers like Google and Microsoft, watched helplessly as Apple vaulted forward to become the world's most valuable company, its iPad alone now selling more units than they do PCs. At the W Hotel, surrounded by gadgets dripping with Apple's influence—MacBook Air-like products, slate-size devices, touch-screen interfaces—I couldn't help but ask the execs present whether Acer, with its traditional business model's reliance on Microsoft, is experiencing the innovator's dilemma.

"It is, it is," said Campbell Kan, corporate VP and president of Acer's global PC operations, in a refreshing display of candor. "It's true that, in terms of timing, time to market [with Microsoft] was not as good as with Android or with the iPad. This is also a dilemma. Windows has been so successful going back just three or four years ago, before the iPad launched. Now, I think Google and Microsoft have realized [what's changed]. But it's never too late." Asked whether Acer was at an inflection point, Kan responded, "I think you're right. Consumer behavior is so different—the behavior and usage models have changed."

Perhaps the honest introspection is one reason for Acer's intriguing product lineup, at least in notebooks. Of all the other devices I saw at the W Hotel, where OEMs were displaying their portfolios, Acer's Aspire S7 laptop was the one I found most appealing. Withs its Gorilla Glass-encased exterior, ultrathin industrial design, and a clever hinge that stiffens the screen's movement the farther it goes back, so it won't wobble when interacting with the touch interface, the S7 was at least more impressive than the devices I had already seen from HP, Lenovo, Samsung, Sony, and more.

Acer S7

Kan chatted briefly about HP's attempt to imitate Apple's vertical model with its 2010 acquisition of Palm, which HP hoped would enable it to control both the hardware and software via Palm's WebOS operating system. "When HP decided to do WebOS, it decided to do everything in the ecosystem by itself, but the company found out that it's not easy," Kan explained. "Building that ecosystem is so difficult. If you don't spend five to 10 years doing it—I mean, just think about what Google is doing and how Apple is doing—it's not going to happen soon. With Acer's strategy, we're still not going to do the ecosystem by ourselves. It's been a long successful story for us to work with industry players like Microsoft and Android, and even the Google Chrome team. We still rely on our relationships with them. We still believe that based on what we have learned from those partners that we are able to have a very good alliance with them."

Michael Birkin, Acer's chief marketing officer, soon jumped into the fray. "The Apple model has worked brilliantly for Apple, but it's not a model that's really going to work for many people," Birkin said. "The history of people trying to do other things you alluded to—like with HP—when the Googles of this world have tried to do other things, it's not always been successful. So I think we just want to have a laser focus on what we know we do well. The world is moving in my opinion from the descriptions of PCs, tablets, and smartphones, to the morphing of product ranges to match what consumer and company needs are. We need to be completely cognizant of that dynamic whilst making sure we play to our strengths and not believe we can do it the way Apple has done it. Because I'm not sure anyone else can."

Added Birkin, "And even then, in the post-Jobs era, let's wait and see. This year, obviously no problem. Next year, probably the same, but it's a very very difficult system to maintain. Apple really has got to knock it out of the park every time they come up with something, so I think this whole dynamic has got another twist and turn to make over the next three to four years."

Still, while certainly risky to venture outside one's circle of competency, many companies have decided the benefits outweigh the risk. Microsoft and Google, for example, are now dabbling in hardware: Microsoft with its Surface tablet, and Google with its acquisition of Motorola Mobility. Thus Acer and other OEMs are being squeezed from all sides—even their own software partners are becoming their direct competitors.

"Well, it's very difficult to analyze, and you'll go nuts trying to figure out whether we are friends or foes," Birkin said. "At the end of the day, in our opinion, you have to focus on what you can do really well, providing it remains relevant. At the end of the day, we're working with Microsoft, and obviously they have their own agenda, and we have to have our own agenda. That means we work closely with them, and yes, there are moments when we compete, but in the history of the success of people moving away from their comfort zones, there's been many more failures than successes.

"I think we just have to make sure we have to get into a world where we can control events as much as we can, rather than events controlling us," he continued. "Which means we're not going to play anyone else's game. We'll play ours—provided we can come up legendary products and move the market and move with it."

[Highwire Image: Ljupco Smokovski via Shutterstock]

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5 Comments

  • Dave Straker

    There are three archetypal eras in companies. I saw it happen in HP.

    1. Founder era, where original genius builds an amazing company (in HP, Bill and Dave ran it from roughly 1940 to 1980).

    2. Momentum era, where people who understood the founders keep it going (still a great place, but not as great as it was, and tending to slow over time). (John Young and Lew Platt ran HP in the 80s and 90s).

    3. Average era, where the company is run by people who didn't really know the founder and doesn't get what makes it special. They systematically kill the things they don't get and so turn it into an average company (if they don't destroy it altogether). (HP got off to a bang with this when Carly Fiorina seriously messed about with it. Others have tried since, but it's not the company  it was).

  • Uhanepono

    well, (human) nature abhors a vacuum.. lessee what fills it.. Something new that will be neither apple nor microsoft or the hardware companies that rely on/facilitate it. Look to linix and open source and the like. I see the new model being of a modular nature where one builds to spec to suit individual needs by cobbling together from the best available components. And more and more will be avalable under such a model. It's green, it's lean, engenders innovation and  cooperation and it's the end of all-in-one thinking. 

  • willbuckley

    Come on guys, hate to get duped into reading a puff piece about Acer, Microsoft and Google with a headline that leads me to believe its' a piece about Apple.

  • Tariq Lacy

    Doesn't this go completely against the idea of knowing when to 'pivot'? If you can't adapt, you'll just be dead in the water in a few decades (or years).