TAIPEI: Acer Inc, the world's third-largest personal computer (PC) maker, plans to start making televisions and electronic books within the next five years. The PC industry is slowing, founder Stan Shih said, so the company is looking for new sources of revenue.

"The PC actually is a mature industry," Shih, 64, said in an interview yesterday in his Taipei office. "PC extending to TV, of course, there's room."

The Taiwanese company will pit itself against Samsung Electronics Co and Kindle-maker Amazon.com Inc, who lead the growing markets for TVs and digital readers. Acer, the world's fastest-growing major PC maker, plans to expand beyond computers as the industry slows, with this year's sales forecast to drop for the first time since 2001.

"I have a question mark" about their ability to be successful, said Vincent Chen, who rates Acer "buy" at Yuanta Securities Co in Taipei. "It's a different business model; TVs are another ball game."

The Taipei-based company Shih founded in 1976 posted a 24 percent increase in computer shipments during the second quarter, the highest among the world's top-five vendors, as sales of low-cost notebooks advanced amid the global recession, researcher IDC said on July 15. The company trails Hewlett-Packard Co and Dell Inc in computer shipments.

Acer shares have climbed 59 percent this year, outpacing the 52 percent advance in the benchmark TAIEX index.

The company unveiled its first Internet-capable handsets in February and said it aims to get 10 percent of its sales from phones by 2011 as it focuses on developing its non-PC revenue sources.

"They definitely have to get ready for the next five years as the PC business slows down," said Calvin Huang, an analyst who rates Acer Inc "buy" at Daiwa Securities Group Inc in Taipei. "It's hard for them to differentiate the e-book; it's kind of a 'me too' product."

Acer is waiting until the market develops before it releases an electronic book. It is currently testing the sale of television models, Shih said. Global liquid-crystal-display television shipments will rise to 203 million units in 2013, from 105 million last year, researcher DisplaySearch said on June 17.

"In audio-video, the Taiwanese technology is still not good enough, compared to the PC," Shih said. "Taiwan can leverage their leading technology in digital and overcome this barrier."

The top five television makers, led by Samsung, LG Electronics Inc and Sony Corp, accounted for 61 percent of industry sales during the first quarter, according to Austin, Texas-based researcher DisplaySearch.

Acer will outsource production of televisions and e-books, similar to the way the company hires external manufacturers for computers, Shih said. PC shipments are expected to decline 4 percent this year, the first drop since the 5.1 percent contraction in 2001, according to estimates by research firm iSuppli Corp on July 14.

While Amazon.com, the world's biggest Internet retailer, doesn't disclose Kindle sales figures, electronic-book makers such as Sony have failed to match the Kindle's popularity, according to Youssef Squali, an analyst at Jefferies & Co in New York. Companies including Samsung, Plastic Logic Ltd and FirstPaper are seeking to compete against Kindle, which comes in a $299 version and a larger $489 model designed for newspapers and textbooks.

E-books will be a "big opportunity for PC companies", Shih said. Amazon.com and Sony are the largest suppliers of e-books, electronic devices that can display reading material including books and newspapers. Shih said the market isn't mature.

"We should participate before the industry settles down," Shih said. "If it's settled down, there's no room for us. So, we have to find the right timing, not too early, not too late."

Shih, who stepped down as chairman in 2004 and remains a board member, currently heads venture capital firm iDSoftCapital Inc and works as a branding and industry consultant.

Bloomberg News

(HK Edition 08/06/2009 page2)