Acer Buys Gateway, Shocks Lenovo - Acer’s Many Arms
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Let’s put Acer’s possible acquisition of Packard Bell to the side for the moment. Gateway owned somewhere between five and six percent of the US market before the acquisition. This market has proven to be a tough one for Acer. As J. T. Wang, Acer’s chairman, noted, “This will be an excellent addition to Acer’s already strong positions in Europe and Asia.”
Yes, Gateway’s position as a distant third in the US market is still better than Acer was doing; it ranked sixth as of the second quarter, according to US market research firm IDG. And it’s worth keeping in mind that Gateway’s cow spots haven’t always been as faded as they are now. About ten years ago, the company was known for selling high quality computers at reasonable prices, and many people still associate the brand with quality (even if we did get a little tired of the cow spots).
This makes Gateway an especially good match for Acer. Like Lenovo, Acer makes lower-market machines. Since Acer said that it plans a multi-brand approach to the computer market, it would make sense for it to push its own brand and eMachines to the budget-conscious, while using the Gateway brand on its higher-quality products.
Incidentally, being able to tap Acer’s resources will also help Gateway compete better with the firms that have been giving it a beating lately. “Joining with Acer will enable us to bring even more value to the consumer segments we serve and capitalize on Acer’s highly regarded supply chain operations and global reach,” noted Ed Coleman, Gateway’s chief executive officer.
And what would happen if Acer acquired Packard Bell as well? Packard Bell still has a presence in China as well as in Europe. It’s worth noting that Lenovo is struggling in China; it may be the third – excuse me, fourth – largest PC maker worldwide, but in China it is only the sixth-largest PC maker and barely profitable, according to the Times Online.
So with one deal, Acer has managed to deliver a major blow to Lenovo on three fronts – or it will assuming it can reach a deal with Packard Bell as a follow-up to its purchase of Gateway. You can’t count Lenovo out, but this has got to hurt.
Next: Acer and Gateway: the Analysts Weigh in >>
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