Former Acer chief details where it all went wrong

Smokers are the new lepers. We skulk around in corners trying to hide our disfigurements from the rest of humanity; the sallow complexion, yellowed fingers and teeth - woe betide us if any of our - er - emissions waft in the general direction of an innocent member of the public.

But within our clique exists a solidarity and sociability lacking in the sweeter-smelling mainstream. Forced as we are to skulk in unsheltered corners come rain or shine, we chat and moan and gossip - thrust together, as we are, by a common affliction.

It was in such a context that I met, on a couple of occasions, the recently ousted CEO of Acer Gianfranco Lanci. Like most of us, I guess, Lanci was a reluctant smoker. Personally, I've given up the habit more times than Mark Twain and I've a feeling Lanci is similar. But in an industry stuffed full of brash, holier-than-thou American CEOs, it's a rare thing that you can hang out with the boss of a huge corporation 'round the back of the conference hall, lurking together in a formation designed to shelter one another from the elements.

For a while there, Acer was interesting. Having shed its manufacturing facilities, the outfit was engaged in positioning itself as a brand - or brands. In fact, no-one can say 'mullti-brand' quite like Lanci, unless perhaps they too hail from the Italian city of Turin. The Taiwanese outfit, guided one suspects, by the indefatigable godfather of that island's high-tech industry Stan Shih, had cast around for a management team that would lead the outfit to its goal - that of becoming the world's 'number one' PC company.

That search ended in Italy and saw Lanci installed at the head of a group of colourful characters, such as our other good friend Gianpiero Morbello, all of whom - it appeared - were hard-core consumers of the deadly weed.

The highlight of Acer's year - for us hacks at least - became the annual worldwide press event at which Lanci would address the world's media, outlining how volumes were up, how contenders like Dell were being surpassed in terms of units shipments and how it wouldn't be long before HP was also defeated and Acer would be able to crown itself king of the PC makers.

It was all going swimmingly until suddenly - almost overnight - the world changed. The PC as the world's most significant computing device was ousted from its perch. The new computing device of note was held in the hand, the new way of connecting to the Internet was by phone and then, catastrophically, by pad. In a battle of the brands, the new ruler of the roost is fruit-flavoured. Brands such as Packard Bell and Gateway were never going to compete with the Jobsian Apple.

Just when Acer was within reach of its goal, the roof fell in, the goalposts shifted, the smoking fag butt was extinguished and Lanci became the fall-guy - he was out and Acer went back to its roots and installed its Taiwanese chairman JT Wang as CEO.

This week Lanci has finally spoken out over the the circumstances behind his departure. In an interview with All Things Digital, he spoke of his realisation that Acer needed to refocus, to invest in technologies needed to combat the rise of the iPad

"At that time, I already saw if we want to become a major player in this new world, we needed to do certain investments, mainly on software and on smartphones and tablets, on touch,” Lanci said. He said the recognised a need for maybe 6- or 700 new engineers to develop the type of products that were set to replace the PC and the all-conquering computing device.

"The real major issue was doing that in Taiwan. This was not possible,” he said. “We needed to go outside Taiwan, be it China or India or even the US or Europe, wherever you can find software resources, software know-how.”

Lanci said Acer thought his suggestion might result in what he called "de-Taiwanisation" of the company.

“I said, ‘Look, it is not de-Taiwanisation,’” he told Ina Fried. “It is just globalisation. If we want to be in the top three (PC makers) in the next three to five years, we need to be a global company and we need to leverage resources wherever they are.”

Acer responded to Lanci's claim, telling the Taiwanese news service Digitimes that "de-Taiwanisation" had never been the issue. "Rather, it is concerned whether the CEO is able to sustain healthy and long-term development for the company," the wire wrote.

Acer claimed Lanci had failed to deliver explanations as to why the company had not met targets for two previous quarters and attempted to defend its position in smartphones and tablets, but the appointment of Jim Wong as the new corporate president following Lanci's departure suggests that the 're-Taiwanisation' of the company is kicking in from the top down.

Announcing Wong's appointment, Acer said: "Together with chairman and CEO, JT Wang, they will lead the company forward to embrace new challenges and opportunities in the new ICT age."

AT CeBIT last year, we asked Acer exactly why it chose to pursue the goal of becoming the 'world's number one' PC company. Wasn't it more a case of seeking prestige than some form of financial benefit, we suggested. Our heretical stance was met with blank looks and failed to extract a coherent response.

Yet later in 2010, founder Stan Shih suggested that it might be time for Acer to indulge in a bit of navel-gazing and perhaps drop the tactic of seeking volume sales at all costs. It might be wise, he dared suggest, to learn from Apple and deliver a better margin on those products it does sell.

According to the Taiwan Economic Times, Shih said that the success of Apple underscored the fact that volume may not have an absolute relationship with profit margin and that, therefore, the 'honour' of the world`s largest PC vendor may be achieved at the expense of profit margin.

It might be wiser, he suggested, not to single-mindedly pursue volume growth, rather to extend operations to the field of service, as Apple has done.

In short, it looks as if the mantra Lanci was handed at the beginning of his tenure: to become the 'world's number one PC company' - in terms of volume, of course rather than profit - was finally recognised for what it was: a vain bid for 'honour' as opposed to a sound business model.

This caused ructions, and the spat evidently turned into a cultural one, pitting the Taiwanese outfit's overlords against the Italian management team, resulting eventually in Lanci's departure.

What we don't know is whether the Wong and Wang duo are smokers.