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Acer Cuts Back on Windows Products; ASUS Kills Windows RT Line

• By Gladys Rama
• August 09, 2013

Top executives from Acer Inc. and ASUSTek Computer Inc. said this week that their companies are planning to scale down production of some of their Windows-based hardware.

In response to sinking traditional PC shipments, Acer will begin producing fewer Windows devices and more Google Chromebooks and Google Android-based devices, CEO and Chairman J.T. Wang told The Wall Street Journal.

"We are trying to grow our non-Windows business as soon as possible," the WSJ quoted Wang as saying in a report published Thursday.

According to the WSJ, while the majority of Acer's revenue will still come from Windows device sales, the company expects devices based on Android and Google's cloud-based Chrome desktop OS to comprise between 10 and 12 percent of its revenue by year's end, and up to 30 percent of its revenue in 2014.

Wang pointed to persistent downward trends in the worldwide PC market as the reason for his company switching its focus away from Windows-based products. According to recent figures from Gartner and IDC, second-quarter PC shipments declined by roughly 11 percent year over year, representing the fifth straight quarter of decline -- "the longest duration of decline in the PC market's history," Gartner said.

Analysts have pointed to lower-than-expected demand for Windows 8, which Microsoft launched last fall, as one reason for the protracted PC decline. Another is rising demand for tablets, in which market Android leads significantly.

"For the PC industry, I haven't seen light at the end of the tunnel," said Wang, who has in the past criticized Microsoft's hardware direction -- specifically, Microsoft's Surface tablet, which directly competes against machines from Microsoft's original equipment manufacturer (OEM) partners.

ASUS Joins Windows RT Defectors
In a separate WSJ report published Friday, ASUS CEO Jerry Sheen said his company is ceasing production of its Windows RT devices.

Windows RT is designed to run on ARM-based devices, instead of the x86 devices on which Windows 8 runs. Prior to Windows RT's launch, ASUS was one of the earliest OEMs to announce it was developing tablets designed to run the OS.

However, poor Windows RT tablet sales led ASUS to take an unspecified write-down in its Q2 financial period, and prompted the company to discontinue its Windows RT product line, the WSJ said.

"It's not only our opinion, the industry sentiment is also that Windows RT has not been successful," Sheen said.

Windows RT is widely seen as suffering from fewer apps, the inability to run legacy apps and having less computing power than Windows 8. Its worldwide tablet market share is considerably lower than that of Windows 8 -- just 0.5 percent in Q2, compared to 4.0 percent for Windows 8, according to IDC.

"We don't see [Windows RT] making traction at all," said IDC program manager Ryan Reith, referring to the research firm's Q2 tablet data. "The bigger problem is hardware partners are beginning to shy away from the platform as they don't see consumer demand or its fit in the industry."

ASUS is among a number of OEMs that have discontinued at least some of their Windows RT devices, including Toshiba, Lenovo and HTC. However, the company will continue to produce Windows 8-based devices because of Windows 8's backward compatibility, Sheen told the WSJ.