Rev. April 9, 2001
Acer America: Development of the Aspire
In early 1998, Stan Shih, CEO of Taiwan-based personal computer (PC) manufacturer Acer, Inc., was reviewing the first estimates of 1997 year-end results. With revenue of $6.5 billion from own brand and sales to original equipment manufacturers (OEMs) such as IBM, the company was now acknowledged to be the third largest PC manufacturer in the world. Although the performance was respectable in the wake of a dramatic drop in memory chip prices that had plunged the company’s semiconductor joint venture into losses, Acer’s extraordinary growth period of the mid-1990s was clearly over. (See Exhibit 1.) The ever-restless CEO was wondering how to re-ignite the fire. Shih was convinced that Acer’s mid-1990 successes were due at least in part to the revolutionary “client-server” organizational structure he had introduced in 1992. The concept was inspired by the network computer model, where “client” computers—the strategic business units (SBUs) and regional business units (RBUs) in Acer’s organizational metaphor—were capable of complete independence but could also take on the “server” role, adding value for the entire network. To Shih, proof of the client-server structure’s potential had come with the 1995 introduction of the Aspire multimedia home PC. Created by Acer America Corporation (AAC), Acer’s U.S. marketing subsidiary and one of Acer’s five RBUs, this new product confirmed Shih’s belief that major initiatives with global potential could be led from any part of the organization without centralized headquarters control. But Aspire’s difficult development experience and its less-than-successful global rollout had also highlighted some of the deficiencies in the client-server model. Business unit independence had resulted in problems in communication, project ownership, product proliferation, and transfer pricing—and, in the end, had led to Aspire’s $100 million of losses in the U.S. alone. Shih realized he had to find a way to balance independence with control, but did not want to sacrifice the employee initiative and entrepreneurial spirit he believed the client-server organization had released. Reviewing the lessons from the Aspire, he wondered what changes might be necessary to Acer’s radically different strategic and organizational concepts if the company was to grow the Acer brand from its current position as number eight to one of the world’s top five PC brands.
Professor Christopher A. Bartlett and Research Associate Anthony St. George prepared this case as the basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. Certain data have been disguised to preserve confidentiality, but important relationships have been retained. Copyright © 1998 by the President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685 or write Harvard Business School Publishing, Boston, MA 02163. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Harvard Business School.
Acer America: Development of the Aspire
Acer’s Growth and Expansion1
In 1976, with capital of $25,000, Stan Shih, his wife, and three friends established a company they called Multitech to commercialize microprocessor technology in Taiwan. The culture Shih established within the young company was built on three strong foundations—a commitment to entrepreneurial initiative (which translated in mistakes being viewed as tuition for learning, for example), a cost consciousness and financial conservatism that Shih described as a “poor man’s philosophy” (financing was largely through employees, for example, who typically took equity instead of market...