Acer coming out with set-tops, Net phone

TAIPEI, Taiwan--Not one to miss out on the Internet revolution, Taiwanese giant Acer will bring TV set-top boxes to North America this year as it seeks to rebuild its presence in the U.S. market and a wireless phone with a built-in handheld computer for the rest of the world.

Acer is currently conducting trials with a service provider on its Internet appliances in North America and Southeast Asia with product rollout tentatively scheduled for the end of the year, said Simon Lin, president of Acer. Acer's TV set-top boxes are built around traditional PC hardware technology but use an interface that is not supplied by Microsoft, Lin said.

The Smart Phone, meanwhile, which combines a handheld and a digital phone, will come out in Asia and Europe at the end of the year, said K.Y. Lee, president of Acer Peripherals, a separate, but related company.

Acer once had a respectable presence in the U.S. PC market, and still holds about 3.5 percent market share in the U.S. based on PCs still in use, analysts say. However, mounting losses at the Acer America division forced the company to largely withdraw from the retail market earlier this year.

The company, which registered revenues of $6.7 billion in 1998, has regrouped to focus on manufacturing PCs for other companies such as IBM and promoting information appliances based largely on PC innards. Acer claims to be the third largest PC manufacturer in the world, and as such has the ability to influence the development of the market for information appliances, particularly in Asia.

Acer's designs on info appliances
The TV set-top box plans have largely come out of a perceived gap in functionality between low-cost PCs and set-tops, executives told CNET News.com.

"With $299 PCs or free PCs, people ask, 'Why do you want to do that," Lin said. "It's because the free PC or the $299 PC is still hard to use." Unlike a set-top, a PC still takes time to boot-up. "With a set-top you need a zero boot-up," he added.

Additionally, applying the "PC" name to these devices leads to ruinous marketing and customer support costs. To get price points that low, manufacturers have to eliminate features and limit warranties or customer help.

"They [consumers] still have the PC in mind. You get the phone calls. So far, I don't think this is a successful model," Lin said. "We will not jump into the $299 game unless the profit margin is OK."

PDA, phone home
The Smart Phone, meanwhile, is geared toward simplifying the mobile lifestyle, said Lee. Currently, those wired consumers who want to carry a computing device and a phone generally have to carry two devices. By combining them into one, the Smart Phone saves pocket room.

In addition, an integrated device makes synchronizing databases easier. With current handhelds, users typically have to put the device in the docking station at work to download information and then a second time to download information on a home computer. With the Smart Phone, two calls via wireless can accomplish the task, according to Lee. The Smart Phone will be capable of receiving or sending limited email messages and receiving limited Internet-based content, he added.

Lin, however, added that the cellular network will need to improve to handle added data traffic in the long term. "The bandwidth is still a current problem," he said. In addition, error correction technology that improves the reliability of information sent wirelessly will have to be improved over time.

Acer will initially roll out two versions of the device. One will have a single-touch screen for the handheld controls and the phone controls. Another will retain the traditional phone buttons and place the handheld screen on the flip-up panel, he said.

The handheld portion of the phone will use a real-time operating system, Lee added, but it will not be the Palm OS or Windows CE. Still, the device will be able to synchronize with standard software, such as Microsoft Exchange and Lotus Notes.

"When you use a cell phone, you don't care about the software," he stated. "In the long term, people will either carry a notebook or carry a Smart Phone."