Acer Makes Cloud Move With iGware Acquisition

Troubled PC maker Acer is looking to the Cloud to expand beyond its core PC business, after announcing its decision to buy cloud specialist iGware July 21 for $320 million (£197m).

Acer, which regularly competes with Dell for the number-two spot on the list of the world’s top PC makers, will call the new business the Acer Cloud Technology Co. once the deal closes, which is expected to happen by September.

In addition to the iGware acquisition, Acer officials also said they were in talks with video game company Nintendo, which is a client of iGware, about a working relationship after the deal closes. However, no details were given.

Strategic Move

Acer executives said the iGware acquisition will not only give the company a foothold in the burgeoning cloud business, but also expand what it can offer existing and new customers.

“iGware offers expertise in cloud technology software design, with services already deployed on a large-scale and long-term basis,” Acer Chairman and CEO J.T. Wang said in a statement. “As a mid- to long-term investment objective, the valuable core technology and capabilities will help create uniqueness for the Acer brand, and support a vast number of our users based on open platforms.”

Acer joins a growing number of tech vendors – including Apple, Hewlett-Packard and Microsoft – in offering cloud services. Among the inter-related trends driving demand for such services – research firm Gartner is predicting a $73 billion (£45bn) market for cloud services by 2015 – is the rapid growth in the use of Internet-connected smartphones and other mobile devices, and the increasing mobility of both consumers and employees, all of whom are looking for ways to store and access data over the Internet.

In a report released in June, networking giant Cisco Systems predicted that by 2015, there will be almost 15 billion network-connected devices – from smartphones and tablets to notebooks, appliances and other smart machines – with the average US citizen having seven connected devices.

Acer reportedly plan to launch Acer Cloud in 2012. The offering will be a web-based service designed to encompass its mobile devices, including notebooks, tablets and phones. Acer negotiations with Nintendo – which used iGware cloud technology for such devices as its popular Wii game console – indicate that the Acer Cloud will be used for third-party products as well.

CEO Wang said that the “goal of Acer Cloud is to allow our users to enjoy and manage all their ICT devices, content and resources with ease by integrating all Acer product, including PCs, tablets and smart handheld devices, within a safe and secure environment.”

Troubled Times

The announcement comes at a time of transition for Acer.

The company underwent an executive shakeup in March – which included the resignation by Gianfranco Lanci as president and CEO – after disagreements with the board of directors on the direction of the company.

Acer, which bought Gateway’s consumer PC business in 2007, had fought its way into the second-place slot among the world’s top PC vendors – some of that growth due to the popularity of netbooks during the global recession – but has been hit by soft PC demand in such mature regions as the United States and Europe and competition from such devices as Apple’s iPad tablet.

At the time of Lanci’s resignation, Wang said that the company would grow its reach beyond PCs, the systems were still central of the company’s future.

“The personal computer remains the core of our business,” Wang said at the time. “We have built up a strong foundation and will continue to expand within, especially in the commercial PC segment. In addition, we are stepping into the new mobile device market, where we will invest cautiously and aim to become one of the leading players.”

Acer also is offering its own tablets as well as pursuing other avenues, including plans to release an “ultrabook” later this year. Ultrabooks represent a new segment of the computer industry introduced by Intel in May. Intel officials see ultrabooks as ultra-thin and light notebooks that offer the performance of a mainstream system and features seen in tablets, including instant-on, always-connected and – eventually – touch capabilities.

Analyst Reaction

Analysts appeared split on Acer’s acquisition of iGware.

Some liked the idea, but others said the vendor should spend more time focusing on its core PC business.

“Acer doesn’t need to have its own cloud computing business,” Vincent Chen, an analyst at Yuanta, told the Wall Street Journal. “It can lease data storage from other telecom companies. … It seems to me Acer is getting overly ambitious again.”