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Fading Acer makes virtual reality gambit to turn things around

Chief executive officer Jason Chen is staking his company's turnaround on ultra high-end headsets far pricier than Facebook Inc's Oculus Rift or HTC Corp's Vive.

[HONG KONG] Acer Inc's best chance of regaining relevance in the brutal arena of computing gadgets may be a big gamble on virtual reality.

The personal computer maker that once led the world in laptops is jumping into VR, but with a twist. Chief executive officer Jason Chen is staking his company's turnaround on ultra high-end headsets far pricier than Facebook Inc's Oculus Rift or HTC Corp's Vive.

Mr Chen is betting that Acer, which became one of Taiwan's best-recognised names partly by under-cutting rivals, can be revived by selling VR headsets to IMAX theaters, theme parks and cinemas across the globe.

While the Oculus and Vive are aimed mainly at consumers, Acer hopes to win fans by debuting its gear in public venues. It's part of his quest for growth through emergent technologies and new markets from health-care and PC- gaming to fitness.

"We don't want declining industries anymore," Mr Chen said. "We need to build multiple businesses and not count on one single business."

Acer is looking to grab a slice of a headset market expected to yield US$20 billion in revenue by 2020, and it's enlisted some big names in the effort.

The company formed a venture with Swedish game developer Starbreeze AB to make the StarVR, a headset Mr Chen says sports superior resolution and a wider 210-degree field of view. But with a price tag in the "four-digit range," the gadgets are geared toward commercial buyers such as movie theaters, amusement parks and arcades.

IMAX Corp, the Canadian company that popularised outsized movie screens, announced in May the StarVR will be installed in future virtual-reality theaters. The first headsets will grace an IMAX experience centre envisioned for Los Angeles this year, Acer says.

Acer is in discussions with others but Mr Chen for now is keeping mum on details. He did describe how PCs - presumably Acer hardware - beneath seats will power movie visuals. It's also considering accessories to convey a more visceral experience - like a vest for viewers so that VR literally packs a punch.

Businesses are expected to buy almost one in five VR headsets by 2020, putting them to work in everything from car design to customer service, according to IDC. But courting corporations is somewhat unfamiliar terrain to consumer-reliant Acer.

"Targeting businesses, on the other hand, requires a different set of sales skills, channel partners, and servicing capabilities. And it might not be that easy for Acer to pivot in that direction," said Bryan Ma, vice president of devices research at IDC.

"Having said that though, this is a relatively new industry."

Mr Chen plans to bring VR hardware to consumers in two to three years when prices come down. Virtual reality experiences are today an expensive hobby, given the US$599 Oculus Rift and US$799 HTC Vive. That's not even taking into account a PC for processing.

"They are very expensive, which is why we aren't targeting consumers first," Mr Chen said.

Once a PC powerhouse to rival Dell Inc and Hewlett-Packard, Acer's profits began to evaporate when demand crumbled with the rise of smartphones. Sales haven't grown since 2010 and its stock has plunged more than 80 per cent from its peak.

Since taking the helm two years ago, Mr Chen has tried to revitalise the business by focusing on areas he deemed had room to grow. That includes inexpensive laptops that run Google Inc's Chrome software, tablet-laptop hybrids, and high-end gaming computers.

Mr Chen concedes that battling Acer's image of being a "low- end" PC maker is one of his biggest challenges. Instead of ad campaigns, he's spending on research to try and confer a premium on the brand. The company applied for 419 patents last year.

"Acer can remain profitable on the back of its renewed focus in R&D, as proven by its sheer volume of patents. Such effort should help reshape its low-end PC brand image," Vincent Chen, an analyst at Yuanta Financial Holding Co, wrote in a note to clients.

It's not all about virtual reality: Acer's also exploring industries ranging from sports to aged care. Last year, it acquired Xplova, the maker of a GPS for cyclists.

This year, it bought 49 per cent of grandPad Inc, which makes tablets for senior citizens. Its venture capital fund is Acer's "eyes and ears," he said.

"Keep doing what we're doing is not getting where we want to be," Mr Chen said. "Even if we do well the industry is declining. You need to use the assets for a new business."