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Acer moves to clear old kit and improve UK supply chain

Paul Kunert

Acer has been forced to write down notebook inventories in the UK by an estimated £4m to clear ageing stock but it looks as though the reckless channel stuffing of the last two years will become a strategy of the past.

At its peak in April and May, Acer had up to five months worth of kit in the channel but the model that has helped to propel the vendor into the limelight with HP and Dell has often strained relations with partners.

"The problem Acer has faced has nothing to do with poor demand forecasting or the slowdown in the market, it systematically overheated the channel and was using every tactic to clear stock," said a source close to the vendor.

David Drummond, who became UK managing director at Acer in April and inherited these problems has been making "very significant efforts to bring its UK channel inventory in profile".

"Resellers have seen a range of bundled promotions and limited period offers over the last few months all of which have helped to boost Acer's sales out numbers to record levels," he told Microscope.

There have been some dramatic price reductions and sales have been at their highest level for months said Andy Field, commercial director at Easy Computers, "the strategy is working but stock levels are still high".

There had been talk that distributors were refusing to place further orders with Acer earlier this year but Drummond said most lines now fall within its guidelines, about six weeks, and has received good re-order activity recently.

Actions speak louder than words and Acer has proposed a new structure to its channel organisation with dedicated distribution and sales-out teams.

"They will be charged with balancing sales in against sales out in relation to the market size of each product category and sub category," revealed Drummond.

Partners have expressed confidence that the current management team are making the right changes, "Acer is moving toward a sustainable model in the UK marketplace," said Andy Gass, UK managing director at Computer 2000.

In the meantime, the vendor claims to have seen unprecedented levels of activity in its retail channel, ASPs have been helped by the Gemstone Range and "massive pre-ordering of the Aspire One netbook."

According to IDC data, notebook sales in the UK soared 60 per cent in the second quarter but ASPs declined 20 per cent, as vendors priced aggressively to maintain market share but figures specific to Acer were not available.

Ian Newall, director of commercials and channels at Fujitsu Siemens, accused Acer of significantly reducing average unit prices (AUP) this year.

"We have recognised Acer has been trying to clear a lot of stock which will naturally drag down AUPs over and above the natural erosion, it is a shame for the channel," he said.

Drummond said, "I don't believe that Acer has destroyed notebook prices but I do believe some of our competitors have been complacent."

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