Acer, Dell Face Daunting Smartphone Market



Acer Liquid Snapdragon

posted a record $5.2 billion

Acer has gained remarkable traction in the last few years: The Taiwanese PC vendor recently overtook Dell as the world’s second-largest computer vendor (after Hewlett-Packard (s hpq)) and it said its third-quarter net profit of $107.8 million would have been even higher had it not been for shortages of some components. Laptops and netbooks accounted for 73 percent of Acer’s revenue during the most recent three-month period, and the firm said it expects shipments of those devices to ramp up by 10-15 percent in the fourth quarter.

But Acer also entered the smartphone business this year, and said today it expects to sell 10 million units by 2012. Dell is following Acer’s footsteps into mobile with the Mini 3i, a touchscreen smartphone that appears headed for the Chinese market. But the computer vendors face some serious hurdles as they move into the phone business. Both are betting heavily on Android, a platform that — while gaining obvious momentum — is already being adopted by a host of entrenched mobile OEMs. As newcomers they will need to offer a simple, intuitive user interface, a challenge for even established handset manufacturers. And it appears both companies are targeting the ultra-competitive market with devices in the $350 range (before subsidies).

Apple (s aapl) proved that a newcomer can move the needle with an innovative, user-friendly handset sporting a slick OS, but it’s not clear that either Acer or Dell is developing anything that can compete with the iPhone or other new superphones. While there may be opportunities in China and other emerging markets, the computer vendors will need to produce stylish, innovative handsets at eye-catching price points to make much of a dent in the smartphone market in the West. And that’s something even the world’s largest OEM has had difficulty doing.


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