February 13, 2008 / 8:58 AM / 12 years ago

UPDAET 1-Taiwan's Acer to launch low-cost PCs this year

(Adds company confirmation, analyst quotes)

By Sheena Lee

TAIPEI, Feb 13 (Reuters) - Taiwan’s Acer Inc (2353.TW), the world’s No. 3 computer vendor, said on Wednesday it plans to start selling low-cost PCs this year, following a recent strong reception for similar models from competitors.

“Between the second and third quarters, we will have products that address ultra mobility and low-cost segments,” a spokeswoman for Acer told Reuters, declining to give more details.

Acer, which previously said it had not planned to sell cheap notebook computers, has changed course to develop PCs to target a new customer base, the Chinese-language Commercial Times quoted company Chairman J.T. Wang as saying.

The newspaper said Acer was still developing the new low-cost model, which could be 7-9 inches wide, and could cost around $470.

“I believe it’s necessary for the company and they cannot let go of such an opportunity since it’s where the industry trend is going,” said Daiwa Institute of Research analyst Calvin Huang.

“It’s still an unexplored area for Acer and they have the resources and channels to sell such products. Acer will also not be the last one — we will see more firms coming out with similar plans.”

On Wednesday, shares of Acer ended 1.98 percent higher at T$49.05, outperforming the benchmark TAIEX .TWII index's 0.04 percent dip.

Taiwan’s Asustek Computer Inc (2357.TW), a competitor to Acer, launched its line of low-cost Eee PC laptops last year, with a price tag of as little as $200.

Acer said the new computers would not cannibalise its current business, as such models were aimed at low penetration markets such as PCs for children and developing markets, the Commercial Times said, echoing similar previous comments from Asustek. Asustek has so far been successful in marketing and selling its child-friendly Linux-based notebook globally, although profit margins for the products are thin, analysts have said.

Acer competes closely with China’s Lenovo (0992.HK) and larger rivals Hewlett-Packard (HPQ.N) and Dell DELL.O.

On Monday, Acer posted a 77 percent surge in its fourth quarter net profit and said it expects to ship 40 percent more notebook PCs this year from 2007, while its overall PC shipments would rise by 30 to 35 percent. [ID:nTP281267] (US$1=T$31.69) (Reporting by Sheena Lee; Editing by Anne Marie Roantree)

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