Acer launches Android phone, says targets on track

HELSINKI (Reuters) - Acer Inc started to sell its first mobile phone model running on Google's Android software this week, and will introduce more Android handsets next year, the head of its phone unit said on Thursday.

The world's second-largest PC brand entered the cellphone market this year with 10 models, with all but the Android phone using Microsoft's Windows Mobile operating system.

"Next year it will be much more balanced," Aymar de Lencquesaing told Reuters in an interview.

"There is definitely momentum behind Android. The pace is faster than most would have anticipated one year ago," he said, adding that the company had no plans to use other operating systems.

Android had 3.5 percent of the global smartphone market in the quarter ended September, compared with none 12 months earlier, while Microsoft saw its market share fall to 8.8 percent from 13.6 percent a year earlier, according to research firm Canalys.

De Lencquesaing said Acer had no plans to follow top cellphone makers, which introduce 50-100 new handsets each year.

"Our sweet spot is probably 8-10 devices, there we would feel comfortable," he said.

The fast-growing smartphone industry has emerged as a battleground between traditional handset-makers and PC makers, with Asustek, Hewlett-Packard, Lenovo, and Dell also eyeing the growth market.

"It's a crowded market place," de Lencquesaing said, adding he expected sharp falls in smartphone prices to benefit PC makers like Acer.

"Anyone in the PC business is used to sharp price falls. In the end the consumer wins, and it expands the market," he said.

In a converse move to PC makers, the world's top mobile phone maker Nokia started selling laptops last month.

While strong profit margins in the smartphone industry have attracted PC brands, the attraction of the low-margin computer industry, where scale is key to profitability, is less obvious.

"The PC business is a commoditised business where scale is very important," de Lencquesaing said.

Acer has prioritized around 40 telecom operators through which to sell its handsets.

"Today about ten operators are selling Acer phones," he said.

Acer aims to reach 6 to 7 percent of the smartphone market in 3-5 years from entering it, helped by volume growth of cheap smartphones.

"We will stick to that. It's core to our strategy," de Lencquesaing said. "So far we are executing more or less on plan."

Analysts expect the smartphone market to approach 500 million units by 2014, this would mean annual volumes of 30 million-35 million smartphones for Acer.

De Lencquesaing said the company would reach a milestone of 1 million handsets sold next year. (Reporting by Tarmo Virki; Editing by Chris Lewis)