Acer blames Microsoft for slow tablet sales

Acer president Wang Chen-tang said that Microsoft is charging too much for its Windows XP Tablet PC Edition operating system, which has which resulted in disappointing tablet-PC sales.

"Microsoft should put more effort into working with vendors in marketing tablet PCs," said Wang.

Previous CNET reports said worldwide tablet sales reached nearly 72,000 units in the fourth quarter of 2002, following the November 2002 launch of the Microsoft tablet OS and tablet PCs from HP, Acer, Toshiba and others.

Sales, however, have been falling ever since. Acer failed to achieve its target of having tablets take 20 percent of its overall notebook sales. HP and Viewsonic also indicated slow sales. Some firms have delayed product launches until later this year, while it has taken almost a year for HP and Toshiba to introduce their second-generation models.

"The price difference is huge compared with regular notebooks. That's why tablet PCs have been challenged in the market," said Zhou Shih-hsiung, an analyst with local market research firm MIC.

Acer sold 100,000 tablet PCs over the last year, amounting to only 5 percent of its overall notebook sales.

"The cost of a tablet PC is NT$7,000 (£118) more than its notebook counterpart. Of this difference, the hardware cost is only between NT$1000-2000. The majority of the difference comes from the OS licence," complained Wang.

"We have tried to negotiate the fee with Microsoft several times in vain. It's very regrettable."

Another Acer spokesman asked that Microsoft drop its universal one-price policy and offer pioneering makers like Acer a break, until the product becomes more mainstream.

"I hope the people in Redmond can hear us." Wang said.

Eunice Chiu, Microsoft Taiwan general manager, argued that the cost of the OS was justified by the value of the pen-based computing it offered users.

"The licence fees cover only a fraction of the overall amount spent developing the product," Chiu said.

Microsoft was satisfied with the rollout of tablet PCs so far, said Chiu.

"We had 21 original equipment manufacturer (OEM) and original design manufacturer (ODM) partners in 2003, and this will increase to 34 in financial year 2004," said Chiu.

Not all of the 21 partners put out their tablet PCs on time in 2003, however, with some delaying the product launch, according to Li Chi-chao, Microsoft's vice general manager for OEM business.

CNET Taiwan's Jen Wei Hung and Joseph Chen reported from Taipei.