Acer India has suspended its smartphone business due to high competition and ‘price sensitivity’, the company’s India Managing Director Harish Kohli told Business Standard. Acer re-entered the smartphone market in India last year with two new models. According to the report, Kohli said that “the change in policies of Make in India and other such initiatives left to the smaller brands rather than any larger brand” although its not clear what Kohli was implying.
MediaNama contacted Acer India’s Head of Marketing Communications Sumanth Sudarshan for a confirmation and clarity, but he was unavailable for a comment.
Kohli added that the mobile phone business was initially stared off in pilot mode and sold phones only through ecommerece portal like Amazon and Flipkart. (List of Acer phones in India here). The company also previously invested $10 million in setting up a manufacturing plant for assembling smartphone locally in India last year. Kohli said that the Indian mobile phone market was more into manufacturing and selling phones at a cheaper price, rather than focusing on quality.
“When you are into that kind of a space, it is a decision you need to take, whether to produce a quality product and bleed or just copy others and make a product for a particular price-point,” Kohli told Business Standard.
Financials and other business segments
Acer’s smartphone business is dwindling and contributes to very small part of its overall business. Revenue from the company’s smartphone business accounted for just 1% of its overall revenue in Q3 2016. This is down from the 2% share in the same quarter last year. The company reported total revenues of NT$ 58,593 million (Taiwanese Dollar) in Q3 2016, down 12% from NT$ 67,239 in the same quarter last year. Net profits stood at NT$ 249, down up 30% Year-on-Year for Q3 2016.
Acer makes majority of its revenues from its PC segment. The company PC segment (including desktops & notebooks) accounted for 76% of overall revenues during the Q3 2016, up marginally from 75% share in same quarter last year. According to research firm IDC, Acer held 9.9% share of the Indian PC market in terms of shipments during Q3 2016. In the same quarter, Acer held 6.7% of the global PC market in terms of shipments, according to Gartner.
Note that the top 5 smartphone makers globally sold about 54% of the smartphones in Q2 2016 according to Gartner, while other manufactures accounted for 46% of sales in the same quarter. Acer likely has no more market-share than the lowest in the top 5, which is Xiaomi at 4.5%. This shows that Acer has failed to sell smartphones–neither in the high or low end space. In fact, the company made an even stranger excuse for the lack of smartphone sales earlier this year, stating “Its actually Acer’s long-term strategy not to grab market share at the onset as part of our road map,”