Acer to focus much more on ARM Powered devices

Posted by Charbax – April 1, 2011
Category:Acer Incorporated
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Yesterday, Gianfranco Lanci was fired (or resigned) as CEO of Acer. The official reason is that the board of Acer now thinks that they need to stop being a Wintel company and become more of an ARM/Linux embedded devices company.

This is part of the big wave of change in the industry that is happening across the whole range of ex-Wintel-exclusive laptop makers such as HP, Dell, Lenovo, Apple, Toshiba and even Asus. All are moving away from Windows/Intel, and into rapidly re-focusing on making ARM and embedded Linux/Unix based devices. Here's the reason why and Apple has been the biggest exemplification of this:

Profit margins:
- ARM and Linux can bring much larger profit margins to these companies. Instead of making 10-20% profit margins selling Intel powered laptops, these giants can make upwards 300% profit margins selling ARM Powered devices, like Apple does between the $150 BOM and $600 retail/consumer sales price of the iphone. The difference in profit margins are huge! ARM enables better distribution of profits among supply chain participants. In Apple's case, their profit margins are 10x larger selling ARM Powered devices compared to the companies trying to compete in the Windows/Intel world.

Differentiation and design:
- ARM and Linux offers plenty more options, the giants of device making can put their engineers to work for the first time, in designing innovative, diversified and differentiated devices, to implement new amazing technology and at the same time have the possibility to aim at making a very significant fashion statement in the innovative designs that become possible. Apple is the ultimate example of this, their ipod/iphone/ipad are regarded as fashion examples, and the possibilities to set new trends opens up to everyone else in the industry. This is why the ARM and embedded code based product innovations are changing and improving much faster than Windows/Intel products. A giant of manufacturing always wants to be in control of their differentiation options, and not be locked into very limited reference designs and rules required to make Windows/Intel based products.

How hard is it to focus more on ARM? As previous anti-trust lawsuits against Microsoft and Intel have shown, these companies try to enforce exclusive relationships with other big players in the industry. They go as far as to use predatory tactics, dumping price on components, dumping price on licences, in exchange for exclusivity and they do what they can to block out of the competition from gaining any significant market share. But ARM/Linux is reaching a point of leadership.

So it will be a very hurtful and perhaps violent moment when giants like Asus, Acer, Dell, Toshiba, Sony, all one after the other announce more and more devices based on ARM and free software such as Android, Google TV and Chrome OS, it hurts Intel and Microsoft. So while these ex-Wintel-exclusive giants don't want to make it look like the start of a nasty divorce, they still feel forced to make the transition, and so you see them all bringing more and more devices, until like with Apple, more than 60% of their revenues and profits suddenly comes from ARM Powered devices, and until they suddenly all come to their senses and realize that ARM is the place to be, and they invest most of their R&D in creating differentiation in that ARM Powered world.

That does not mean nobody wants to make Windows/Intel laptops anymore. It just means everybody spends much more effort to make much more profits in bringing differentiated product designs in the ARM Powered world.

  • guest

    “In Apple’s case, their profit margins are 10x larger selling ARM Powered devices compared to the companies trying to compete in the Windows/Intel world.”

    Apple’s profits are 10x compared to other ARM mobile device vendors as well. So I think this speaks more of Apple’s greatness, rather than that of ARM/Linux

  • All the companies who invest in selling Android ARM devices have significant growth. Apple is the biggest company of them all, but they got to be that big only since they figured out to focus on ARM with the ipod and with even faster growth since they focus on ARM in the iphone.

  • guest

    Significant growth is different from signification profits or profit margins.

    Other than Apple and RIM, of ALL the ARM/Linux/Android vendors you mention, ONLY HTC is able to make more than 10% operating margin

    “….the mobile phone market, where most handset OEMs struggle to post a profit or even 10% operating margins…”

  • guest
  • The profits come in once sales channels expansion and R&D costs are recouped. You have to look at revenues for all the Android ARM companies, all have had significant growth thanks to Android, and are all well positioned to make huge profits coming up, even as prices shrink. You look at the stock price of all the Android ARM companies, all have been doing well thanks to Android and ARM, while sales numbers and revenues for Windows/Intel companies shrink and their perspective for profits disappear.

    The pie chart regarding Apple should be their stock price valuation versus the probable shrinkage in market share and profit margins, and their true reach on the market now that there are 1000 competitors working with the superior Android platform. I believe your pie chart will show you Apple sure can be a high value company, but not THAT high value. There’s not enough there for them to claim $317 Billion valuation. What Apple is trying to make analysts think is that sure there is huge value to gain from using ARM and that somehow they have a monopoly on that.

  • Anonymous

    Since August or September Microsoft is one of 250 companies over the world who are licensing ARM.
    So Microsoft next Window version,windows 8 shall be possible to drive on a ARM developed processor computer or Smartphone device.

    This about Acer and ARM, is very great news, I bealive.

    But it won´t be Microsoft who will be the looser, it will rather be Intel who will be the looser in this development to ARM world in processor business for computer makers.

    But like Jen-Hsun Huan, co-founder and CEO of Nvidia, have said recently (after CES in Las Vegas in january) that fortcoming Nvidia cpu with more and more cores that fortcoming Smartphones will be as fast as computers today and pc-game computers.
    Jen-Hsun Huan predictions will be truth in just 2-3 years.

    Intel have now only two years on them to change they paradigm and that they can´t cope
    that on such short distance.

    In two years ARM cpu:s will have 64-bit and 4 or 8 cores and still so much cheaper than cpu:s
    from Intel.

    Intel can´t compete with that short time schedule.

    And I am a strong bealiver in that todays tablet pc will soon come in larger sizes too,
    why not in 22″?

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