No tears at Acer over one-tier strategy

No tears at Acer over one-tier strategy

Year-to-date channel sales are up 72 per cent for Acer Computer Australia compared to the same period last year, including a whopping 430 per cent growth in the small office/home office (SOHO) space, mainly through retail.

Greg Mikaelian, Acer's national channel sales manager, said the growth was evidence that its one-tier channel strategy and Web-based Acer Partner eCommerce (APEC) tool had succeeded in a "tough" market where others had failed.

"We are attracting business from the channel because of our low cost of business and speed to market," Mikaelian said. "Our decision to deal directly with corporate resellers and retail partners caused a stir at the time but it has been very successful for us. The one-tier channel model was the best decision we could have made."

Retail has been particularly successful for Acer's one-tier strategy, which sees it bypassing distributors to deal directly with 50 corporate or gold resellers and 150 second-tier partners. These include a range of retail outlets, independent buying cooperatives and franchise operations, which in total gives it "about 1,000" customer touch points in the channel.

Acer currently generates 80 per cent of its PC sales through channels with the other 20 per cent being from large tenders, which it handles itself directly.

Retail partners include Office National, Leading Edge Computers, David Jones, Betta Electrical, Retravision (on the Eastern Seaboard) and the NARTA buying group.

"We have had three successive quarters of over 400 per cent growth in retail," Mikaelian said. "Admittedly that has been off a small base, but the results are excellent and we could not be happier with our revenue and market share performance."

Mikaelian would not talk about the amount of revenues Acer is garnering from the Australian PC market, but said the company had held third spot in market share surveys for three consecutive quarters.

He said "there is a gap in the market" for a vendor that is focused on delivering fresh technology in a cost effective and timely manner. Big vendors such as HP and IBM are too slow to market with technology and lumbered with high overheads, while on the other hand white-box manufacturers still don't offer the level of confidence that a brand name like Acer does.

"That is where Acer is making inroads," Mikaelian said.

Meanwhile, the growth of Acer's channel sales is set to continue. "We are talking to four more tier-one resellers while two or three more retailers will be launching with us in the next three months," he said.

While Acer cut its number of distributors from 13 to four in a restructuring last year, it has maintained its revenues, according to Mikaelian. As a percentage of total channel sales, distribution has fallen from 25 per cent to "7 or 8 per cent", he said, but the revenues are still the same as the corresponding period last year.

Mikaelian said the distributors being used -- Alloys International, Hi-Tech, Compu Wholesale and IT Wholesale -- are all doing very well for Acer but he has no intention of adding any of the big broad-based players.

"We are always looking for ways to grow our business but I am not sure our strategy would work [in broad-based distribution]," he said. "The distributors we deal with understand our business model and we are talking to a couple of others.

"We are a one-tier vendor based around fresh technology and e-business. Long term it is the right business model. We are not another IBM or HP. Those who understand our model will be extremely successful. We can help them compete against Dell and white-box manufacturers."

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