Acer's Phone Strategy: What's Next?

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Acer is taking an admittedly conservative approach to the U.S. smartphone market but hopes to expand its presence later this year by selling its mid-tier unlocked phones through large U.S. retailers.

For now, the computer maker will continue to focus on mid-tier unlocked Android and Windows phones, which the company began selling last year through distributors. The distributors in turn have been selling the devices primarily into online retailers and second- and third-tier brick-and-mortar retailers, said Gregg Prendergast, president of Acer’s Pan America region. Later this year, however, Acer hopes to expand distribution to large brick-and-mortar retailers, either direct or through distributors that target large retailers.

The company currently distributes its phones through Ingram Micro, D&H Distributing, and Synnex Corp. Selling to carriers is a “longer term initiative,” Prendergast said.

In the U.S., the company will continue to stick with midrange phones to build the brand, he said.

Selling smartphones, however, isn’t enough to deliver a profit in the cellular market, said Jason Chen, Acer’s corporate president/CEO. For that reason, Acer is complementing smartphone sales with a cellular-equipped bike computer, called the Xplova 5 (see story this page), and an investment in grandPad, a company that markets an LTE-equipped tablet. The 7-inch tablet is optimized for people over 75 years of age to simplify phone calling, video chats, email, voice-email, and picture-sharing functions. It communicates over a “private family network” with family members whose smartphones run a companion app. The tablet comes with month-to-month service plan.

Another way to add value in cellular is by making the premium Windows 10 Mobile Primo phone available only as part of a kit that lets people use the phone’s apps through a desktop-like setup. The kit, which leverages the Windows 10 Mobile Continuum feature, includes a mouse, keyboard, and a dock to connect the phone to a monitor, which isn’t included in the kit. The kit will be available in August or September through Microsoft stores and online retailers at a price to be announced.

The kit is the first of its kind, Acer said.

“Because there is not enough margin in phones to support a lot of companies, you have to add value,” Chen said. Phone hardware itself “doesn’t generate value,” he added.

Hundreds of phone suppliers operate in China, mostly as OEM suppliers, in turn leading to lower handset margins and a looming shakeout, Chen said.

Signaling that it doesn’t plan to be among the companies that will shake out, Acer unveiled the $249-suggested Liquid Zest Plus unlocked phone with Android 6.0. It will join the currently available $99 Liquid Z410 and $199 Liquid Jade Z, announced last August, and the Windows 10 Mobile Liquid M330, which rolled out in April at $99 to replace a Windows 8.1 model.

The Liquid Zest Plus focuses on camera quality and battery life. It comes with 5.5- inch HD display, 2GB RAM, 16GB of storage, 5-megapixel selfie camera with wide-angle lens, and 13-megapixel main camera with laser, phase-detection and contrast-detection autofocusing. The 5,000 mAh battery delivers near-two-day battery life.

The Primo, in contrast, steps up to 1080p 5.5-inch AMOLED display, 21-megapixel rear camera with dual LED flash, 8-megapixel selfie camera, 3GB RAM and 32GB storage.

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