Acer takes a calculated risk with Tablet PC

When Microsoft Corp. talks about the Tablet PC, there’s no hiding from Acer Inc.’s TravelMate 100.

First unveiled in November at Comdex, the TravelMate 100 turned heads with its sleek design and swivel display, which could convert from a tablet into a notebook. Since then, the TravelMate has made repeated appearances to promote the November launch of Tablet PC, including demonstrations by Microsoft Chairman and Chief Software Architect Bill Gates.

Now Acer is gearing up for a global advertising blitz, to be built in part around the TravelMate 100, with the goal of reestablishing its position as a top PC vendor, according to Stan Shih, Acer’s chairman and cofounder.

Shih said Acer is willing to spend what it takes to rebuild its brand, which has been diminished since the company’s heady days in the mid-Nineties when its Aspire PC proved that home computers didn’t have to be sold in unsightly beige boxes. But the company has set conservative sales forecasts for the TravelMate 100, with up to 10,000 units expected to ship during the fourth quarter.

Set to ship for US$1,999 when Microsoft launches its Windows XP Tablet PC Edition operating system in November, the TravelMate 100 is equipped with an 800MHz Ultra-Low Voltage Pentium III processor from Intel Corp., 256M bytes of RAM, integrated support for 802.11b wireless LANs, and a 10-inch TFT-LCD screen (thin-film transistor liquid crystal display) that can swivel 180 degrees, converting the device from a notebook into a Tablet PC.

By tapping the TravelMate 100 as the center of its brand-building efforts in markets like the United States, Acer is taking a gamble with an unproven product, but Shih believes that the TravelMate 100’s design mitigates the risk that the Tablet PC won’t find favor with end users.

“Our Tablet PC design is convertible from a Tablet PC to a notebook, so we have some downside risk protection,” Shih said. “Microsoft is also going to promote this new platform, the Tablet PC, and they have got a lot of resources.”

Shih said Acer’s conservative sales forecasts for the TravelMate 100 are the result of hard lessons learned by the company in the past. Citing the example of inventory problems with the Aspire PC in 1995, Shih said Acer wanted to avoid the mistake of overestimating sales and finding itself stuck with a large amount of inventory on hand.

“Microsoft will not compensate me if I have too much inventory,” he said. “We don’t want to have overexpectations but we are prepared to catch this opportunity.”

If the Tablet PC and the TravelMate 100 don’t win market acceptance, that’s OK, Shih said. Acer will already have benefited from increased exposure of its brand to customers, he said: “It’s a one-time cost.”

“In the past, we have never had the opportunity to visit the top 50 companies in the United States and today Microsoft is bringing us into those companies,” Shih said. At present, several large U.S. companies are already using the TravelMate 100 in trials, including Bank of America Corp. and 7-Eleven Inc.