Disruptive failure: How Acer Took Aim at Dell and HP and missed

Two years ago:

With new netbooks, laptops, desktops, and, yes, a smartphone, Acer CEO Gianfranco Lanci explains why he expects to soon overtake No. 2 PC maker Dell

via Acer Boss Lanci Takes Aim at Dell and HP – BusinessWeek.

Today Acer CEO and President Gianfranco Lanci resigned with immediate effect. Acer is in trouble. You can read more on Acer’s current problems in the wake of the downward revision of its sales targets for two quarters here: Acer Should Overhaul Its Operation: Stan Shih | – The Taiwan Economic News

In a nutshell, whereas Acer under Lanci took aim at Dell and HP, it seems that Apple took aim at Acer. And whereas Lanci missed, Apple’s aim was true.

What is interesting here is that Acer had a very disruptive approach. They used the low end “netbook” concept to take share from incumbents motivated to move up-market.

But what went wrong? Part of the answer is that “low end” does not just mean “cheap”. Low end disruption is about also offering simplicity and performance along a new dimension or trajectory of improvement.

Mobile computing could not be implemented as a low-end strategy because the modules available to portable computing could not be used to make it expand into new contexts of consumption. Windows and keyboards and all the input methods associated with portables could not be adapted to mobility. You could not use a netbook in places or at times when you did not use any other laptop.

In addition the business model was not a good match. Low margins could not support development or new integration that could improve that which was not good enough. Acer did not have the means to tackle the problems of not-good-enough mobile computing. They did not build software and low margins meant that they could not even try to build software.

Competitors also were motivated to respond. HP and Dell built their own netbooks which, arguably, were just as good (or, perhaps more accurately, just as bad) as Acer’s. But more problematic was the fact that regular notebook prices dropped to netbook levels and the category came to mean “cheap” not “convenient”.

Finally, Acer’s strategy did not have the time horizon necessary for true disruption. It takes many years to polish a product and nurture it up the trajectory. Acer was too impatient for growth and not patient at all for profit.

Contrast this with Apple’s tablet strategy:

  • It dealt with complexity of computing by removing it. This was not easy as simplification required a new platform altogether–something that portable computers could not benefit from.
  • It priced low but held on to margins because removal of complexity also reduced cost
  • The margins allow it to rapidly iterate on integrated development and improve the product
  • Competitors initially were not motivated to respond. They did not have the tools at hand to respond: no integrated operating system for PC vendors, no distribution for phone vendors.
  • Apple is also patient enough to wait for several product cycles. Even though demand is astronomical, the iPad still has a long way to go to become a new computing standard. Time is on Apple’s side.

Apple is effectively disrupting the PC with asymmetry. It contrasts with Acer’s reliance on a sustaining, symmetric approach. The market was showing clear signs of over-service, declining margins, in-absorbable features and performance and complexity.

Calling the winner in 2009 may have been tough given no iPad was visible, but knowing Apple’s resources, processes and motivations should have guided observers to the right answer.

  • Danthemason

    In the race to the bottom we have a new winner.

  • This really is another case of integrated VS a component strategy. If you are doing a component business model, you have no method, except price, to be disruptive. And being low priced only disrupts the current layers and does not disrupt the entire play-field by opening up new (I hate using this word) paradigms of how to use a computer.

    What Acer was trying to disrupt was who made the most computers.

    Apple is trying to disrupt what is a computer. This is a much harder task and only a company that controls the entire system from the hardware to the OS can do this. Once the category is open, it is ripe for copycats but the initial start has to be from a company that does most of the IP (Intelectual Property not Internet Protocol) stack themselves.

    If you are going to be a component manufacture, the only weapon you have is price.

  • Remember all the analysts that criticized Apple for not creating a netbook?

    • Hamranhansenhansen

      Also, Apple was criticized for not creating a $500 PC, and for not shipping Windows PC's.

    • JustSayin

      you can always find analysts who criticized Apple in the past for wrong strategies and analysts who predicted the success of Iphone, Ipad and Ipod. So if you all do is just point out analysts who where wrong, you are as bad as the analysts, at least the analysts put their reputation on line when they made the prediction and announce it publicly, you are not contributing anything by mocking them. I guess it is easy to not have any position. Besides who knows where the field is headed for the next 5 years, Apple might yet again be criticized.

      • kevin

        True, mocking doesn't do any good by itself. The point, though, is that Apple repeatedly explained all that is wrong with the netbook (tiny screens, cramped keyboards, too slow (too heavy an OS for the processor), too slow to turn on, too awkward to use in mobile contexts, small margins, etc). And the analyst response: ignore, or even worse, derision. And when the iPad was released, they mocked again with ridiculously low sales estimates, and tweener-is-useless/doesn't-replace-anything comments.

        All those analysts showed was a repeated lack of understanding of user-product experiences, business models, and disruptive processes. (HD, here on this blog, is showing us everything that they are not.) So if they don't understand all that, what's the point of being an analyst other than to collect the money and run, just like other financial scumbags. For that, they deserved to be resoundingly mocked.

      • A post's impact is not correlated to it's length.

        Just pointing out how in 2009, netbooks were going to take over the world and A LOT of analysts said that Apple was going to become a niche PC maker. I believe even Acer made similar comments.

        The problem with both Acer and many analysts is the fixation on price and not value.

      • Joe_Winfield_IL

        That's a fair criticism. Also, "analysts" often get lumped in with "pundits" as the bogeyman naysayers. Some analysts are better predicters than others, and some are better at articulating their thought processes than others.

        However, I have a hard time saying that @davidchu doesn't have any position. He, along with several other commenters (not even including the amateur analyst community) expresses a clear POV and brings insight. There are of course those who are simply bullish fanboys, but the community on this site is much more interested in the business aspects of Apple's success than what you will find on rumor and fan sites. We respect Horace for his transparency, his rational methodology, and his explanatory skills. These strengths stand in stark contrast to the group known as "analysts."

        Also, keep in mind that most of us only have access to a portion of the work that analysts do. Not all of the research is public, and I assume much of the best work is access-restricted. This is fine and it is fair, but in many cases all we have to critique is the outcome of analyst forecasts. If all we can see is a number, the analyst community needs to have thicker skin when the numbers are criticized for their consistent inaccuracy. The same goes for client notes and questions on earnings calls; if the focus of your public-facing work is myopic or misdirected, it is subject to criticism.

      • asymco

        If an analyst presents his methods, then we can criticize his methods.
        If he presents his data, we can criticize this data.
        If he presents his assumptions, we can discuss his assumptions.
        If he presents himself, then we can question him.

        If an analyst does not describe his methods, or his assumptions; if he does not share his data and does not stand up and present himself to scrutiny, then he leaves us no choice: all we have to criticize are his results.

      • Joe_Winfield_IL

        Much more eloquent than my version. 🙂

      • His Shadow

        I get what you are saying, but I'd like you to find a major industry analyst who wasn't already an "Apple fanboy" who didn't predict doom and gloom for all things Apple. I'd really be interested to see it.

    • handleym

      I'm with david chu on this, mostly. Let's consider two current day examples, so we can be accused to seeing what we want in the past:

      (a) The place of the iPad.
      I would say, based on my reading of the net, that the majority pundit/analyst position is that the iPad is a replacement for the laptop. Hence all this moaning about how doing xyz is more painful on an iPad than a laptop. Hence viewing the iPad business in terms of how it will cannibalize laptop (NOT netbook) sales. Hence completely missing what I consider to be the next strategic frontier.
      What's the correct (IMHO) viewpoint?
      Hardware grows cheaper, smaller and more energy efficient — but the human body is not changing at Moore's law rates. SO the future is not a single computer per person, in the one "best" form factor. It is multiple computers per person, from a big screen desktop to a laptop to an iPad to an iPhone to an iPod shuffle. Every one of those devices is BY FAR the best for a particular use case, and MOST people experience every one of those use cases.

      Given this, an argument about why tables make poor laptops is as stupid as an argument about why toasters make poor pizza ovens. It ALSO means that the strategic future lies not only in make a better tablet (or phone, or PC); it lies in having a good story for tying these together. I have seen NO-ONE (not even our beloved Horace) perform such an analysis, but I think the outlines are pretty clear.

      Apple has been in the digital hub game for a long time, and slowly but steadily is upping its game. On the plus side, it is well aware that is has screwed up with MobileMe for far too long, but it appears ready to correct that in a big way soon. On the negative side, the original vision for the iPhone was that users would never deal with "files", they would deal with "photos" or "songs" or "movies" as those particular objects. And through the first few years of the iPhone this was OK. But with iPad this UI vision hit a real problem. Users wanted to be able to get a large variety of content on and off the device, or to manipulate and view items in multiple apps. Since this became apparent with iPad about 14 months ago, all Apple has given us is the justifiably hated and mocked stupid scheme of choosing files (ONE BY ONE!) in that lameass "Apps" box in iTunes. The better apps on iPad have come up wit a variety of ways to try to deal with this, using DropBox or Google Docs or acting as a WebDAV server. But the landscape is clearly stupid and unpleasant — every app doing its own thing in a different way, and with file sharing between apps spotty and iffy.
      It remains to be seen what Apple will do in the iOS5 UI, but this strikes me as THE issue for the future.

      Android, on the other hand, has an alternative vision for how this will work. Their vision is everything lives in the cloud and all you have on your local device is more or less transparently cached proxies for the "real" version in the cloud. This is great for the things it is great for — which is not actually everything in the universe. Thus we still have no useful and coherent story from Google regarding media — just a few crappy player apps, no unified experience. However, regardless of the limits of google's story, at least it has the potential to play with multiple computers simultaneously — remember, that's the issue here.

    • handleym

      (b) Music lockers.
      This is something (re-energized by Amazon's announcement two days ago) that I see plenty of pundits praising — and which strikes me as a MASSIVE solution looking for a problem.
      I suspect (and we'll see soon enough if I'm wrong) that
      – Google's take on this will be the geek take "wow, wouldn't it be awesome to have your entire music library available in the cloud, so that you could listen to it anywhere". (Unlike my iPod?)
      – APPLE's take on this will be a whole lot more nuanced "how could this sort of thing be USEFUL to users"?

      I see two possibilities here. One is iPandora — personalized radio. Use this Genius/Ping stuff to provide you with personalized radio, BUT both improve it and make money off. The improvement could be things like transparent caching, so that the songs are downloaded (and stored encrypted) on your iDevice while on WiFi, so that your precious cell minutes aren't much used. The monetization would be to give you immediate access to lists of the last 100 songs you've heard, with the ability to play the song again maybe up to three times to see if you like it, and of course an easy link to click and buy it.

      A second possibility is iSpotify — $15 a month, and you can play any song in iTunes. Ideally this would also involve downloading the song and having it encrypted (and perhaps, stored in a location that cannot be accessed by non-super-special code) so you can arrange songs in iTunes, share them between devices etc, all that (and perhaps Apple tracks which songs are being listened to so the record companies know how to split the revenues between artists) — but once you stop paying the $15 a month, all those tracks becomes dead.
      This would require a whole lot more record company buy-in. It's also THE smart thing to do to save their business — and that means it's highly likely to be rejected by them. We shall see.

      The point, in both these cases, is that there is a trivial "let's interpolate the future three days beyond tomorrow" mindset, which is what I see everywhere on the net. There is ALSO a not too hard issue of looking at the big picture and questioning how everything COULD fit together better, which I DO NOT SEE from pundits and analysts, but which strikes me as a far better predictor of where Apple will go.

      • unhinged

        Music subscription is not as popular as buying individual tracks; the record companies tried it with a number of different services but so far it hasn't worked.

      • handleym

        I don't find subscription appealing as a model. But Spotify is apparently very popular.
        I also don't find personalized radio appealing. But I don't deny the popularity of Pandora.
        I think the real issue here is
        (a) accepting that different users have different ways they want to access and curate music and
        (b) providing implementations of these models that DON'T SUCK.
        After all — selling music on the internet did not take off until Apple provided a non-crappy experience.

        I've already indicated ways in which both Pandora and Spotify could be improved — through transparent caching and access to the recently played playlist in one case; with the ability to treat subscribed to music JUST LIKE purchased music (including moving it to different devices, making playlists, etc) — rather than having to use a crappy flash player and a painful search system REPEATEDLY to interact with a music subscription system.

      • I think a lot of those issues are due to their contracts with the music labels saying what they can and can't do.

      • Ted_T

        "But Spotify is apparently very popular."

        There is a reason for that — Spotify pays essentially nothing to the record companies and thus can offer free/very cheap music to its users. It is an unsustainable model — record companies will tolerate giving away their music only for so long even if creating an iTunes/Apple competitor is very important to them.

        Subscription models are yet to be proven to be anything other than a perpetual record industry fantasy.

      • handleym

        As I said — the recording industry has never missed an opportunity to miss an opportunity.I agree with you that Spotify type capabilities are a long shot — I said so in my very first post.On the other hand, we know that Jobs is in intensive negotiation with the recording industry; and he has a track record of being able to slap some sense into these people and persuade them to look (marginally at least) towards the future rather than pining for the glory days of the 1980s…Regardless (and remember, this was my original point) I don't see music lockers as a very useful solution; and yet I see pundits and analysts talking about who wonderful they are and what a great thing Amazon has done by getting there first rather than Apple. I see Apple as not being interested in that sort of lame-ass capability, but being interested in something far grander — and THAT was my point — that the mainstream media and business world seem completely clueless about predicting what Apple might do next even though (IMHO) the shape of that direction is obvious.

  • davel

    Did Acer generate market share improvement and expansion of margin in year one?

    With the advent of the iPad the demise of the netbook occurred. This is anecdotal of course, but the iPad was imminent and the netbook stopped selling.

    Could their strategic failure simply be one of timing and the entrant of a new disruptive force? Acer is a pure PC company in this space. They make lots of different models and hopes something sticks. I remember an announcement of several tablets which seemed to be done in the hopes that one catches fire. This is what PC companies do. They do not innovate. IBM was one of the few companies that innovated in this space. They gave up a long time ago.

    HP and Dell do other things than just churn out PC's. HP has a robust services division as well as selling printers, servers, etc. Dell has a large footprint in the corporate world and is more direct to consumer with

    I am not defending Acer here. I just think that they tried using the standard models that PC companies use and failed, it seems to me, because Apple came in and blasted them with a new technology.

    • kevin

      When Acer said they would overtake Dell, it was limited to the context of the PC market, not in overall revenue (which includes additional markets). In other words, they expected to move into the No. 2 spot on those charts that IDC and Gartner generate every quarter.

    • I think what you are saying is that Acer is a low-level systems integrator while HP and Dell have additional high-level systems integration businesses. I wouldn't argue with you on that.

      I think your analysis is correct in that Acer was not structured to innovate. What really interests me is that Acer recognized very early that the PC had become 'good enough.' They approached the problem through the frame of what assets they had. Apple has really approached the problem from the frame of what the solution should be and slowly built the assets needed to get there.

      • Joe_Winfield_IL

        Your second paragraph perfectly encapsulates what has made Apple the great company that it is today – solutions-driven technology.

    • stephenreed

      I agree with your insight. Acer's strategic failure was simply one of timing and the entrant of a new disruptive force.

      The Acer CEO was let go because he did not recognize nor react fast enough to the disruption. There have been a number of highly placed executives suffering the same fate, e.g. at AMD and Intel, for failing to meet the ARM smartphone/tablet platform challenge. These executives likely defended increasing untenable positions to increasingly skeptical boards of directors. In large part, the very high salaries and other costly benefits of senior executives are justified by the perceived good judgement expected of each executive. When finally their judgement is evidentially flawed, they are shown the door by the board.

      The notable exception is Microsoft's Steve Balmer. In spite of repeated software development mistakes, repeated acquisition failures, and repeated misses of disruptive challenges, he continues to lead Microsoft. I expect this is because Mr. Balmer focuses on protecting the cash cows that are Windows software sales for client and server and MS Office. At what point does Mr. Balmer leave?

      • OpenMind

        When cash cows become skinny cow. How long? 2 to 5 years.

  • Hamranhansenhansen

    Ultimately, Apple humiliated Acer from both sides:

    • out-mobiled — iPad is the cheap, simple, mobile computer the netbook wasn't
    • out-performed — MacBook Air 11-inch is the tiny but full-powered computer the netbook wasn't.

    • stephenreed

      Right, the MacBook Air has the 1.4GHz Intel Core 2 Duo, which handily outperforms the Intel Atom 1.6 GHz, coupled with the NVIDIA GeForce 320M graphics processor with 256MB of DDR3 SDRAM shared with main memory – that gives outstanding graphics performance far beyond the Intel graphics chip typically found in netbooks.

      I have a 2-year old Asus EeePC that I've converted to Ubuntu Linux and I'm very happy with it for portable web browsing and photo handling. With an external USB disk drive I can even develop Java programs that I ordinarily code on my quad-core desktop. But if I were to replace that netbook today I would choose the MacBook Air.

      • r00tabega

        I tried a netbook back in late '08 and again in '09.
        Both efforts were abysmal failures.
        The netbook guts are decent (Atom was resonably spiffy, could run a 1080p display), but the input devices were unusable.
        The trackpad kept registering false clicks, the keyboard was small, and the screen height at 600px didn't do well with windowsXP… linux and hackintosh OSX did fine, but didn't support essential the hardware features (ie, ACPI, sleep, wifi).

        I ended up giving both away and staying with my unibody macbook. For those who can do with a tiny screen and using external mouse, a netbook might suffice… but a desktop gets more bang for the buck.

  • newtonrj

    As current competition and newcomers arrive employing pure tablet O/S hardware solutions, they quicken the change away from traditional WIntel models. Laptops, desktop and slablets are quickly loosing popular development assets to the monetized app store models. Watch the boxed software, desktops and laptops at your local PC shop shrink away and ponder what this means for blue-chip development shops worldwide. – RJ

    • stephenreed

      I see this at Sams Club, Walmart and Best Buy here in Austin already. iPad displays are right at the door in Sams Club, and they have dropped the line of LCD monitors they used to carry for desktops.

      To elaborate your point, electronics and software brick-and-mortar retailers are further squeezed by online retailers. Indeed the generic online app store shuts out the local retailer.

      The masses of developers are swiftly migrating to the mobile platform. All sorts of new apps are coming: I just read about a point-of-sale cash-register device based upon the iPad.

      The big enterprise software companies, like Oracle and SAP, will not be hurt by mobile because their products are used on the server side – the back end. Contrast that with game development companies which are rushing to mobile, and that's where a lot of the boxed game software at local retailers will vanish as that distribution channel is supplanted by the various app stores.

      • OpenMind

        If Oracle and SAP does not embrace iPad, someone else will. Someone else will create a front-end of Oracle and SAP, but a back-end of iPad initially, a.l.a middle tier. Then middle tier will grow to replace Oracle and SAP overtime. Look back what servers did to IBM mainframe.

  • shanghaipanda

    I think Acer has been struggling to find a balance between a Taiwanese PC mindset and a global take of IT market. Lanci was brought in to Acer to strengthen Acer's expand in Europe, and perhaps the rest of non-Asian World. Unfortunately, Lance has been trying to bring the whole management team back to Europe, which left the Taiwanese side unsure and annoyed.
    People and analysts might think this resignation is just a pure play of failure of execution in the post-PC devices. It's good to calculate the loss of netbooks in the face of the arising of tablets.
    I believe Lanci is just a person that needs to go down in the misdst of the power struggle in the Taiwan PC enterprise.
    It's easier to erase someone undesirable in the corporate structure when you find the best time to pull off a jasmine revolution in hand.

  • David

    Come on Developer. Linux has been around for a decade and a half and people like you(no offense is meant) keep thinking that it's success is "just around the corner."

    Not going to happen. Ever. As long as the hardcore people drive Linux, it will never gain traction with the mainstream and will never be more than an edge case client operating system. Apple has show that you can wrap Unix in such a way that it can be usable.

    The Linux people are more interested in looking smart.

    • OpenMind

      And talking about "open" bullsh*t.

    • Coward_the_Anonymous

      Actually Android is pretty nice "wrapper" on Linux. It just needs some more time and polish.
      Google has means to make it much better. Question is if they want to use the means (and money). I don't think so. It is not their goal to make Android the best.

      • Joe_Winfield_IL

        "Coward_the_Anonymous" – that is a phenomenal screen name.

  • Pingback: Who Disrupted Who?()

  • jehrler

    You know, with the World's second largest PC maker having to revise its revenues down (and shipments?) due to tablets isn't it time for the analysts to step back and really recognize that at least the powerful tablets (iPad, Xoom) are true substitutes for PCs in a variety of use cases (like netbooks).

    And therefore, if they really want to use market share numbers to accurately reflect the market, these tablets need to be part of the calculation for PC percentages.

    I mean, really, if you add iPads to Apple's market share, it really explodes and *accurately* describes the changes going on in the market. If you don't, then you can't see why or to whom Acer (and netbooks) is loosing share.

    • stephenreed

      Agreed. One could look at shelf space allocated to mobile vs PCs in retail stores to visualize the shift over the last few years. At my local Best Buy for example, mobile is at the front of the store, and growing, while PCs are at the back, and shrinking.

  • Pingback: Who Disrupted Whom?()

  • davel

    I recently read where Balmer and company would kill any product not tied to Windows. I have long held the belief that Balmer is an idiot. He may be a good manager, but he is not an IT manager. In other words someone who knows and values technology and can recognize and anticipate changes and evolve with it.

    Microsoft is good at milking Office and Windows OS. They are not successful outside of competing within this domain.

    • OpenMind

      I also suspect that Microsoft hinder their own search engine development with mandatory of Windows platform. I don't have proof but I know they do that in other products. All network related products must use .Net framework, which is a resource hog and slow.

    • stephenreed

      What goes around, comes around …

      In the 1980s, then tiny Microsoft competed against giant IBM. Microsoft's disruptive Wintel platform eventually forced giant IBM out of the PC software and manufacturing business. IBM could not react successfully to the Microsoft disruption because they had cash cow legacy mainframe, minicomputer and workstation businesses they thought they had to protect.

      Now, in this decade, tiny ARM competes against revenue giant Intel, and Apple and Google compete against revenue giant Microsoft. Steve Balmer at Microsoft is defending his cash cow legacy Windows client/server and MS Office software license sales, and despite failed responses to disruptive challenges is retained by the MS board of directors.

  • davel

    In reading these comments it occured to me, what is Apple's plan with MacOS apps?

    A major reason for the success of the phone and pad is the availability of 3rd party apps that are both useful and inexpensive. Apple recently extended this model to their PC line. I wonder how this will evolve in their consumer computing/electronics portfolio.

    I used to just think this was a way to streamline distribution of apps, but now I am not so sure. It may be a way to provide a mobile technology experience in a smooth gradient from touch to macbook pro.

    • The Mac line is going to go through a transition period right now where it is going to begin alienating it 'power users' that remained loyal to Apple during the tough years in favor of the mass market. The MacOS apps store is one piece of this puzzle.

      Your right in that Apple wants to unify the user experience across it's devices, but the other thing I would watch out for is how it helps Apple enter more vertical markets. As of this moment, XCode (the app development tool for OSX) is the most mature dev platform for mobile devices. A lot of developers have written code for the healthcare, financial, real estate, etc industries. Now those developers can port their code without too much rewrite and back it up with easy distribution.

      Vertical integration is always the key for any company. Apple's dominance in desktop publishing and video editing was what kept it afloat through the dark years. Now they are making a big push into small businesses as well as fortune 500 companies.

      • So long as they keep bask Apple will not alienate their power-users. I do see them wanting to unify the experience and would not be surprised to see the UIView class hierarchy found as a subset of OS X's NSView at some point in the future.

      • I know I'm ithe majority on this one, but I don't see how they can improve the workflow for the majority without breaking the workflow for people who have been accustom to doing things they way they have for years.

        I hope they prove me wrong.

      • Oops. I meant minority!

      • r00tabega

        I can't see the Mac line alienating power users as long as xcode (as we know it) still exists.
        You can't run anything as powerful as xcode on iOS.
        For that you need a moderately powerful laptop or desktop with the ability to create random binaries.
        If OSX becomes iOS, how will app developers code the apps?

        You mean they might alienate the indie devs who won't (or can't) sell on the Mac App Store? That's a different story.

      • What I mean is that Apple has shifted it's focus from pleasing the people you see in the documentary 'MacHeads' to pleasing Miss Jane Doe. (I think Apple's marketing and product design is driven towards females 25 – 45).

        For developers, we don't care if that means there is a larger market to sell to, but for people who love to tinker with the system, I think it will be a rough transition. One of the general tenets of User Experience is to not give the user the opportunity to break the system.

      • Ted_T

        There is at least one niche where Apple has alienated the power users: wedding videographers who have been heavy users of the Mac Pro/Final Cut Studio tool set. By not providing MacPro/Final Cut Studio support for Blu-ray they are pushing them over to Windows where full Blu-ray support is available. Some power Home Theater Mac users maybe alienated by the lack of Blu-ray support as well.

        I'm in no way saying that Apple turning its back on Blu-ray is a mistake, but it is hurting them with certain groups of power users.

      • Jocca

        I think blue-ray will not take off at Apple unless the state of broadband improves in this country. It still cannot handle streaming 1080p media content over wi-fi. For the moment I can get 720p Netflix movie to stream reasonably well at home, over my 811n wi-fi set up but from time to time, the stream stops because the connection can choke on the amount of data going through. Also, many people have given up handling physical media altogether. I have not bought a dvd for over a year and I do not anticipate doing this in the near future. By the time broadband catches up with streaming 1080p movies, our way of consuming media would have fully transitioned into cloud computing leaving CDs and DVDs behind to suffer the same fate as vinyl disks.

    • Wouldn't it be great to be able to purchase truly "universal" apps. iPhone+iPad+Mac

      • handleym

        No it would be stupid, the kind of idiocy you'd expect from Microsoft.

        The WHOLE POINT of iOS vs OSX is that one is optimized for touch, one is optimized for keyboard. They solve different problems in different ways. Making "universal" apps an expectation is an invitation to touch apps that run badly with a keyboard and vice versa — just like running Excel on a Win CE phone.

        And similarly for those "power users".
        Apple has incentives to limit some dicking around with the OS that makes the platform perform worse — for example they could try to clamp down even more aggressively on third party menulings.
        But assuming that they will switch to the iOS user model on macs is just stupid beyond belief. Use your 30 inch screen to display a single window? Give up a keyboard? Don't be idiotic.
        Apple is in the business of fixing REAL USER PROBLEMS, not in the business of constraining people for no obvious reason. Use of a keyboard on modern computers is not perceived by ANYONE to be a problem.

        What are problems?
        – It is not ideal to have the entire file system visible to the user, but it's not clear that it is a problem.
        Apple have done fairly well with the current OSX system of hiding certain directories in the Finder, and making others require you to go through a dialog before you change them.
        I could imagine the default mode in future OSs being that you don't get to see the disk outside your home directory — Finder doesn't show it and you have to use some tricks to see it.

        – Installation of apps was a problem — now solved with the App store.

        – Naive users have a real confusion about files. They have, for example, no clear idea of how "stuff" in or in relates to files — and no clear idea that randomly throwing away music files they find on disk "because they are already in iTunes" is not a good idea — or maybe it is? Was the file in ~/Music/iTunes/iTunesMusic or somewhere else on disk?
        This was/is precisely the reasoning behind the way iOS does not use files as part of its UI metaphor, and has app silos.

        At root, I think, the fear of dumbing down OSX boils down to this, to losing files.
        The thing is, however, that Apple has NO alternative to files.
        Apple tried (with the original Mac — resources forks, file types, etc) to re-invent the file. They eventually gave up fighting that battle with OSX. With iOS they tried something slightly different — re-inventing not the technology of files, but the UI of files. But the limitations of what they came up with are painfully apparent on iPad.

        I can see OSX instituting some policies to try to protect users from the most common errors. For example — if you try to delete files using the FINDER from certain directories, even directories that you own, like the iTunes directory, you will be asked if that is what you really want. Alternatively, they could convert many of the most problematic directories (like the iTunes folder or even the whole of ~Library, to packages — like iPhoto has already done.

        But more than that makes no sense. I mean, for christ's sake, Apple's goal is to make its users lives better. And no-one's life is better if the DEVELOPERS all say "fsck this, I'm moving to a platform where I can actually get some work done".

      • Wow. Superb point about the file systems.

      • jocca

        I have a mobile account and I use iDisk to bring my files unto my iPad. With iWork for iOs, this allows me to accomplish a fair amount of cloud computing work, Apple style.

  • Bruce

    It's too bad. I like Acer products in general, and I'd like to see them do well.

    In the cell phone area, Acer is not allowed to succeed in the US without permission from the major carriers, particularly Verizon and AT&T.

    In the netbook area, Acer was not allowed to sell a good product at a low price due to pricing policies of Intel and Microsoft. I hope the day never comes where I have to pay a different price for pasta at the supermarket depending on whether I use it for a salad or a main course.

    I think the Honeycomb tablet may be too much, too late. A Nook Color sized tablet with real Android 2.x and 4 buttons at $250 looks like the best opportunity for success right now. Apple could close that window of opportunity with a larger iPod touch this fall.

    • r00tabega

      Bingo, Bruce.

      Microsoft and Intel saw the race to the bottom with the netbook market, and it's potential to disrupt both their entire economies, and put a stop to that.!5270094/the-netbook-conspira

      This is why Acer lost, Lanci was either ignorant of the real market movers involved, or was taunting them into action. Microsoft didn't get where they were by being inattentive.

  • DDd

    That ad is for ASUS not Acer.

    • stephenreed

      Recall that Asus began the netbook disruption with their Eee PC, which I bought a couple of years ago. I think Asus is reacting better to the ARM mobile platform disruption, and their CEO may keep their job :).

      The linked engadget article has been updated to state the the Asus tablet has been pulled from the market. I suppose this is because of Google's new policy on software development for Android which aims to prevent fragmentation of the Android code base. In Google's judgement, previous fragmentation – tailoring open source Android extensively for a particular device – hampers the updating of that device's OS version to the next release. Google wants every Android phone updated to the newest release whenever possible.

      • unhinged

        And now all the pro-Android, anti-iOS folks will have to admit that the Apple fans were right all along.

        Good times. 🙂

    • CndnRschr

      Doh… my bad. Asus, Acer – I conflated them in my mind.

  • stephenreed

    I'm a software developer targeting Java platforms so I naturally favor Linux. A couple of years ago I bought an Asus Eee PC, upgraded the RAM to 2GB – which is the maximum the Atom platform then allowed. I chose the Eee PC version that had only Solid State Disk – so as to get the longest battery life. After MS Windows XP became the predominant OS, netbooks had to include a power-hungry hard disk drive.

    I replaced the Asus Linux with full Ubuntu Linux to have a screen layout identical to my primary development deskop workstations. The netbook continues to fully justify its purchase price as a satisfactory portable development device.

    If I were to replace the netbook today, I would get the iPad 2 and the MacBook Air. Only the latter supports Java development, i.e. running a JVM.

    As I understand it, Apple will not allow execution environments, such as the Java Virtual Machine, on iOS because Apple wants a Trusted platform, in which all apps are inspected and deemed safe by Apple before any user downloads them from the App Store.

  • I tend to agree with Developer here. " if they had gone in with ubuntu or developed some lightweight OS based on the linux kernel" is basically saying start with a solid base and go from there. Apple did this with BSD/Mach and we have from that OS X and iOS. Acer could have done a systems approach and might have had a harder time at first but could have been disruptive in the end.

    Just because it is Linux, it does not have to look and act like Linux.

  • If you think the iPad was disruptive…just wait until we start putting A6 processors in the MacBook Air.

  • davel

    I wonder how free it will be.

    Google is now demanding to see everything you do to use Android. Now that they have marketshare they seem to be clamping down.

    So much for the free to everyone ethos.

    • I have no problems with Google clamping down and I'm actually more bullish on Honeycomb because of this move. I live in Asia and occasionally I meet engineers doing systems integration work for Android. From what I've heard, a lot do a pretty piss poor job. That's where Google has a problem. If they want to enter vertical markets and fulfill their vision of the network cloud, they need to start with a device that is super stable. They can write the best software in the world, but if SIs like Samsung screw up, then you still have a crappy product.

      Call Google disingenuous if you will, but this was a necessary move.

    • kevin

      Google had to do this because it's Android (and Google) brand is getting ruined by crappy hardware products; the $100 no-name junk at Kmart. I can see those vendors never getting their hands on Honeycomb.

      Now we also know why we're hearing rumors of Motorola exploring its own OS (and several months ago, same for HTC; and Samsung is already slowly but steadily building up Bada into a more powerful OS.)

    • davel

      I agree with you guys that Google needs to create order in their world, but there are several problems with this.

      1. Potentially the pick favorites and will clash with their clients. I have read that facebook was doing some sort of Android work and are not pleased to give their competitor advance detailed warning about their plans.
      2. More importantly, my understanding of why companies like Apple do not sue Google for infringement is because of the hands of non-contract status of their distribution. By creating strings I would think this ties Google directly to their platform. I am not a lawyer but I would think this raises legal contractual patent issues.

  • r00tabega

    Checked link, Engadget says
    "Update: Whack attack! Best Buy has pulled the Transformer page and it no longer shows up in search results on the site. Was the price too good to be true? Thanks, Jaime!"

  • CndnRschr

    All would be fine except that Google touted its openness of Android to bait the companies that then invested millions of dollars to develop products based upon it. Google was consistent up to the point where it’s the whole house of cards began to fold in on itself. It's their right to change the rules. Perhaps going forward, the Android device OEMs will be less naive in their trust? Steve Jobs pulled the Mac clones in 1997/8 for similar reasons (threatening the core – plus it was a desperate thing to do).

    A solution might be for Google to charge a device license like Microsoft. That preferentially hits the low end of the crap-gadget market. Of course, that will open everyone to even more scrutiny and Oracle and Microsoft will be licking their lips.

  • asymco

    Excellent point. I remember that pivotal moment when Microsoft co-opted the netbook. That should have been the signal that it was a dead end. (Not because of Microsoft per se but because it was clear that it was not disruptive.)

    +1 for Rome without coffee reference.

  • Niilolainen

    Nice post. Would like to see more of your opinions on the other Taiwanese and Chinese vendors

  • ASC

    Very few people realize that its Intel (Besides Acer) that is the loser in this. Netbooks / Net-tops (Desktops with Atom processors) were created by Intel to drive growth for their processor business since the Mainstream & high-end procs were not growing as fast and their 3 year replacement cycle theory was falling apart.

    Intel pushed all PC vendors to drive the netbook / net-top category…Acer took to it like an alcoholic takes to cheap moonshine (Atom Procs). It took them to a "high" very fast (#2 WW in PCs) and now they're having withdrawal symptoms. Proof point… Intel's Atom (Cheap Moonshine) Mix … would be going down as end-customers are getting wiser.

    MS was late to the party and never really participated actively bcos they did not want to dilute their core PC licensing business. (i.e. royalty from higher end OS). you just need to look at the mix of Netbooks sold with windows OS… it would be a pretty small number compared to the rest of the PC market. But still they're facing after-effects of the party.

    For the PC vendors who never really participated in the party… they're still doing ok with the commercial revival.