Europe and US shift to tablets hits Acer

Acer said on Friday that its PC sales in the first quarter would fall short of expectations, highlighting the continued shift of consumer preferences in Europe and US from notebooks towards tablet devices.

With just a week to go before the end of this quarter, the Taiwan group said its PC revenues were 10 per cent less than in the fourth quarter of last year, during which Acer suffered an 11 per cent year-on-year fall in revenues.

“We’ve been hearing about weakness in the US and European markets for some time, but this is confirmation of how weak it is,” Jenny Lai, head of Taiwan research at HSBC, said.

“It also shows that tablets’ cannibalisation of the notebook and netbook markets is definitely happening.”

Amid concern over the impact of the Japan earthquake on supply chains, Acer’s statement is a reminder that any weakness in global demand represents a far greater danger for most technology groups.

Acer’s decline over the past few months has left it struggling to maintain its number two spot against Dell.

That shift partly reflects a cyclical change in the PC industry.

While the immediate recovery from the financial crisis was driven by consumers buying slimmer notebooks and netbooks with a longer battery life, over the past year it has been corporate IT spending that has driven the PC market.

Consumer demand, which weakened as economic uncertainty in the US and Europe persisted, has turned to tablets and smartphones.

Gartner, the research consultancy, this month lowered its PC shipment forecast for 2011 by 5 per cent to 387.8m units, citing weak consumer demand in China and competition from other mobile devices.

Acer has had only limited success in smartphones and initially adopted a wait-and-see strategy on tablets.

It achieved a breakthrough this week when AT&T said it would feature Acer’s first tablet, the Iconia, this summer.

Acer said that it expected second-quarter shipments to be flat compared with the first quarter, partly because “Acer started shipping tablet PCs in March, and will launch several new models in Q2 to ramp up the unit shipment”.

Acer is probably not alone in having a disappointing first quarter.

February revenue numbers from the top contract PC manufacturers in Taiwan, which account for 90 per cent of production, were down roughly a fifth from January.

Even Hon Hai, which makes Apple products and desktops for Dell, saw an 18 per cent decline.

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