Acer Retools for Tablets

Acer, second in computer shipments after Hewlett-Packard, announced its smallest quarterly profit in more than six years, and lowered its upcoming forecasts in anticipation of further reductions, citing company reorganization, inventory adjustment and seasonal slow-down.

The company's first quarter net income came in at just over $41.5 million, down more than half from a year earlier.

The less than stellar results forced company president, Gianfranco Lanci, to resign last month, paving the way for its global IT operations chief, and 25-year Acer veteran, Jim Wong to take the helm and transition the company to new industries. Laptops still account for 73 percent of Acer's sales.

Wong will oversee new tablet and mobile device developments. The changes come as its first tablet, the Iconia Tab A500, hit stores earlier this month.

Acer has been criticized for not taking the tablet phenomenon seriously, and Lanci's departure underscores this reality. Newly announced plans indicate the company is committing to tablets, where, like all other newcomers, the one to beat is Apple.

The Iconia, with a detachable keyboard for laptop functionality, will run on Windows 7 and feature a 10-inch display, 2-gigabytes of memory, high-definition graphics and both a front and rear camera. The device is set to cost $450 at Best Buy stores beginning April 24.

Because of its dependence on low-priced laptops and its late arrival at the tablet party, Acer will have a lot riding on its tablet debut. The Iconia will face an increasingly-crowded market, joining Motorola's Xoom, Samsung's Galaxy Tab and Asus' Eee Pad Transformer.

Its reception as a lower-priced option may entice some takers, but Apple's first generation iPad, starting at $500 is hardly high, considering its legions of fans and favorable consumer ratings.

Still, it will be critical for Acer's survival to find a niche in the tablet market where new arrivals are coming quickly and where Apple, who owned 90 percent of market share last year, continues its success with the introduction of its popular and strong selling iPad 2.