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:
- 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.
- Wintel is dead, long live ARMdroid (armdevices.net)
- Acer DX241H, 24″ Monitor, Freescale i.MX51 Powered, comes with Chrome OS pre-installed? (armdevices.net)
- New Acer will be more like Apple, less like HP (engadget.com)
- Acer Sets Sights on Apple, HTC After Lanci Chase of HP Stumbles (businessweek.com)
- Acer pledges efforts to rebound amid slowing sales (seattletimes.nwsource.com)