Acer

Acer's founder was born Shih Chen Jung in 1945. A shy youth, Shih blossomed at National Chiao Tung University, where his natural math aptitude helped him graduate at the top of his class. Shih, who later westernized his given name to Stan, earned a master's degree in 1972 and went to work as a design engineer at Qualitron Industrial Corp. It was not long, however, before the entrepreneurial bug bit Shih; in 1976, he and several friends founded Multitech International with a $25,000 initial investment. The new firm started by designing hand-held electronic games, then expanded into the distribution of imported semiconductors. Shih renamed his company Acer Inc. in 1981. The name was derived from the Latin word for acute or sharp. The company enjoyed its first international success that year with the launch of MicroProfessor, a teaching tool. The company began manufacturing PC clones--computers and components that were sold to larger companies with strong brand names--in 1983. Acer diversified vertically in the late 1980s, soon becoming "one of the most vertically integrated microcomputer manufacturers in the world," according to Los Angeles Business Journal. In 1995, Fortune 's Louis Kraar called Stan Shih "a fascinating combination of engineering nerd, traditional Chinese businessman, avant-garde manager, and international entrepreneur, with an outsize ambition and vision to match." The young CEO applied all of these talents to his young enterprise. In stark contrast to the micromanagement, nepotism, and profit-taking typical of Taiwanese companies, Shih established a modern, progressive corporate culture. Although Shih's wife, Carolyn Yeh, served as the company's first bookkeeper, the founder vowed that his three children would have to look for jobs elsewhere. Time clocks were anathema, even in production plants. In 1984 he established Taiwan's first stock incentive program. Within four years, 3,000 of Acer's employees were also stockholders. The late 1980s brought internal and external changes that had a devastating effect on Acer. The internal problems were completely unexpected. In 1989, Shih hired Leonard Liu away from a 20-year career with International Business Machines Corp. (IBM), making him president of the Acer group and chairman and chief executive officer of Acer America Corp. Described in an October 1995 Fortune article as "a cerebral Ph.D. in computer science from Princeton," Liu had previously been the "highest-ranking Chinese American executive" at IBM. Liu's managerial style reflected his experience at "Big Blue": in contrast with Shih's traditionally progressive corporate culture, Liu tried to centralize control of Acer. His off-putting approach has been blamed for a management exodus in the early 1990s. At the same time, the computer industry quickly matured, shifting from a high profit margin business to a low margin commodity practically overnight. Price wars pushed component prices down so rapidly, and a strong New Taiwan dollar made the country's goods so expensive, that it became difficult to make a profit on the finished product. At the time, Shih would have been the first to agree with such an assessment. In January 1992, he offered to resign from the company he had founded. Acer's board of directors turned down Shih's resignation, but accepted Leonard Liu's withdrawal three months later. By mid-year, Shih had resumed day-to-day administration of Acer and its American subsidiary. Instead of being cowed by the setback, Shih was determined to cement Acer's future in the PC industry by transforming it from just another OEM into one of the world's leading computer brands. He would achieve this goal via several revolutionary strategies. In a 1995 Financial World article, Shih compared Taiwanese computer manufacturing to Chinese restaurants, saying that "Chinese food is good, and it is everywhere, but it has no uniform global image or consistent quality." The same was true of personal computers; alt