Acer India puts mobile business on hold

Finds it difficult to offer quality in a 'price-sensitive market' such as India

Taiwanese information technology hardware major Acer has put its smartphone business on hold in India. Acer, which had already invested in setting up two manufacturing lines for the personal computer business and smartphones, is finding it difficult to offer quality in a ‘price-sensitive market’ such as India.

“We decided to come back (with smartphones) last year. However, (with) the change in policies of Make in India and other such initiatives, we realised it is a big market left to the smaller brands rather than any larger brands,” said Harish Kohli, managing director, Acer India, in an interview with Business Standard. “So, we put it on hold once again after we have done quite a bit of investment in starting two manufacturing lines in India.”

Kohli said the mobile business was started as a pilot. Currently, Acer smartphones are sold through e-commerce sites Flipkart and Amazon. Nearly 97 per cent of Acer India’s revenue comes from the information technology hardware business.

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

“Today, mobiles have become a commodity from a price-point basis, rather than an experience basis. There are very few products based on experience. 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,” added Kohli.

Acer India owns 10 per cent of India’s personal computer (PC) market. It expects single-digit growth in revenue this year, driven by an aggressive expansion of exclusive retail stores across the country.

The Centre’s push for stepping up domestic manufacturing has attracted small players to open shop in the country in the past two years. 

   

A report released jointly by IIM-Bangalore and Counterpoint last month suggests the mobile phone is the largest electronic item in the basket of electronics goods imported into the country.

In the past 18 months, 40 new mobile phone assembly units and 12 new component or accessory manufacturing units have started in the country on the back of tax benefits by the government.

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

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