Acer Incorporated - Business Origins

Business Origins

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 Incorporated 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 micro-computer 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.

In 1981, Acer hinted at a sweeping change in strategy with the establishment of Third Wave Publishing Corp. The term "third wave" referred to the most recent phase of the history of Taiwan's computer industry: the first was characterized by trademark and patent piracy, the second by clonemaking, and the third by technological innovation. Instead of simply churning out other companies' designs, Acer began to set itself apart from most of its Taiwanese competitors by doing its own research and development. For example, the company developed one of the world's first Chinese language computer systems. In 1986, Acer was second only to Compaq to introduce a 32-bit PC with an Intel 386 microprocessor.

Acer went public in 1988, having chalked up average annual growth of 100 percent from 1976 to 1988. In 1988, net profits totaled more than $25 million.