Acer passes Lenovo in Q1, next up: Dell

Acer Inc. achieved its top goal for 2007 early in the year, passing Lenovo Group Ltd. as the world's third largest PC vendor in the first quarter. For the rest of the year it plans to extend its lead over Lenovo, executives said Friday, putting it in position to challenge Dell Inc.

Moving ahead of Lenovo is more than a sales victory. It's also a vindication for Acer that its strategy of increasing sales through working with distributors and other partners in key markets is superior to Lenovo's acquisition strategy. Lenovo has not managed to grow faster than its rivals since it bought IBM Corp.'s PC division.

"We believe we can maintain the number-three position this year," said Gianfranco Lanci, Acer's president, at the company's first quarter investors' conference on Friday in Taipei. He expects to extend the lead over Lenovo as the year progresses.

Acer's share of the global PC market rose to 6.8 percent in the first quarter, up a blistering 46.1 percent over the same three months last year, according to figures from market research company Gartner Inc. Lenovo's share was 6.3 percent, putting it in fourth place. Dell didn't turn in a stellar performance, either. Its market share dropped to 13.9 percent from 16.4 percent in the same quarter a year ago as unit sales declined 7.8 percent, cementing it in second place overall.

Acer executives also reiterated a prediction to increase PC shipments by 30 percent to 40 percent year-on-year in 2007. If the company can keep up its rapid growth, and Dell fails to rekindle its sales, Acer will move into its rearview mirror before long.

"We don't have a target date to challenge number two, it's still far off," said J.T. Wang, Acer's chairman. But he also said Acer will continue to put a major focus on expanding in the U.S. market, home to Dell and Acer's other main competitor, Hewlett-Packard Co.

U.S. users will continue to see good prices from Acer, he said, and Acer will continue to keep prices low in order to take market share in the U.S.

Acer's revenue rose 20 percent year-over-year in the first quarter to NT$99.5 billion ($3.01 billion as of March 31, the end of the three month period being reported). Net profit increased to NT$5.66 billion from NT$4.02 billion a year earlier.

Executives credited strong sales of its laptop PCs in the U.S., Europe and Asia for most of the gains, and said they are trying to increase sales of desktop PCs. Notebooks accounted for 62 percent of Acer's revenue in the first quarter, while desktops were only 17 percent.