Acer India puts mobile business on hold as competition intensifies

Harish Kohli, Managing Director, Acer India
Taiwanese IT hardware major Acer has put its smartphone business on hold in India. The company, which had already invested in setting up two different manufacturing lines for its core personal computer business and smartphones, finds it difficult to offer quality in a ‘price-sensitive market’ like India. 

“We decided to come back (with smartphones) again last year. However, the change in government policies of Make in India and other aspects, our realisation has been that it is too much of a market which is left to the smaller brands rather than any larger brands trying to enter it  at this particular stage," Harish Kohli, Managing Director, Acer India, told Business Standard. "So we put it on hold once again after we have done quite a bit of investment in terms of starting two lines of manufacturing in India.” 

Acer smartphones are now sold through ecommerce sites Flipkart and Amazon as Kohli pointed out that the mobile business was started off as a pilot. Nearly 97 per cent of Acer India’s revenue comes from IT hardware business.

Acer India, which owns 10 per cent of India’s PC market, expects single-digit growth in revenue this year driven by aggressive expansion of exclusive retail stores across the country including smaller cities. 

The company, however, says mobile business may turn out to be risky game for it, since majority of the players in India are looking more at delivering smartphones at a cheaper price than focusing on quality. 

“Today, the mobile phone has become a commodity from a price-point basis rather than experience basis. There are very few products which are based on experience. When you are into that kind of a space, it is a decision that you need to take whether to produce a quality product and bleed, or just copy the others and make a product for particular price-point," said  Kohli.

The Union government’s push for stepping up domestic manufacturing has attracted many small players to open shops in the country during the last two years.    

A report released last month jointly by IIM Bangalore and Counterpoint suggests mobile phone is the single largest electronic item in the basket of electronics goods imported into the country. In the last 18 months, 40 new mobile phone assembly units and 12 new component or accessory manufacturing units have started in the country as the government incentivised them with tax benefits to produce goods locally.

For Acer, Kohli points out, customer experience plays an important role. “You make a stupid mistake somewhere where the experience goes for a toss, you are likely to be into a big issue. Any of the larger brands would have a lot at stake.”

As computer penetration in the country continues to be low, PC makers like Acer are focusing on bringing out easy-to-use products that are also light-weight. The industry has also seen PC manufacturers trying to capitalise on the poor user experience on tablets and making convertible devices that can be used as tablet and PC. 

 
Milestones: 

1. Acer entered Indian market with its PCs in 1999 

 
2. The company first started mobile business nearly 6 years ago

 
3. After a pilot project, it renewed focus on mobile business in 2015 

 
4. Acer feels so many small players in the country and price sensitivity diverted its focus from mobile business

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