Acer/iGware

Acer bets on cloud computing

Acer agrees to pay up to $395 million for US cloud-computing firm iGware in a move that some analysts question.
Acer Cloud is expected to become a key element of the company's offering (AFP)

Acer has struck a deal to buy US-based iGware for up to $395 million as the Taiwan computer company makes a bet on cloud computing.

Acer, which is the world’s second-biggest maker of personal computers and notebooks, agreed to pay $320 million upfront, plus another $75 million if it meets certain performance measures. The Taipei-based company, which earned revenues of almost $20 billion during the past fiscal year, intends to use iGware’s technology to establish its own cloud infrastructure, called Acer Cloud. iGware’s software is currently used in a number of consumer devices including Nintendo’s Wii.

Acer said in a statement announcing the deal that it sees cloud computing as a major industry trend. Indeed, Acer’s deal happened on the same day that Apple launched the latest iteration of its OS X operating system, Lion, which adds even greater support for cloud computing — in effect, a way of using internet data storage to synchronise across multiple devices.

“In the next 10 years, Acer Cloud is expected to become a key element to create unique differentiation for Acer products,” it added. Acer was advised on the deal by J.P. Morgan. iGware did not have an adviser.

After the merger, iGware will become Acer Cloud Technology and will set up subsidiaries in Taiwan and China. Acer intends to immediately start integrating hardware and software design, and expects to launch products that take advantage of Acer Cloud services next year.

Acer has a history of growing through acquisitions. In 2007 it shelled out $710 million for Gateway, then the fourth-biggest personal computer company in the US and a leading retail PC provider. Citi advised Acer on that deal. Then in 2008 it bought Taiwan's E-Ten Information Systems in an all-share deal for NT$9 billion ($311 million) and 75% of Packard Bell.

The current deal has met with a mixed reception from analysts. Some say that Acer is right to gamble on the future of cloud technology, but others say Acer has paid a high price to own a property that it could just as easily have leased from a telecommunications firm, and would do better to focus on improving the performance of its core business.

Acer has shaken up its management team this year. Chief executive officer Gianfranco Lanci resigned in March on account of “different views from a majority of the board members” on Acer’s future development, the company said in a statement at the time. In April, Acer chairman JT Wang was appointed CEO, while Jim Wong was promoted to corporate president. Recently, Acer announced that it would be writing off $150 million over disputed accounts and Wang last month took responsibility and said he would relinquish his remuneration as well as bonus of 2010.

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