Taiwan's Acer Computer will continue its low-price strategy in line with the decline in personal computer prices and in the economy, according to Hong Kong managing director Michael Mak. While average computer prices had fallen, consumers also were more cautious about spending and were choosing to buy budget PCs, Mr Mak said. 'For example, we see most Hong Kong buyers spent $13,000 on desktop computers last year, but only $10,000 this year,' he said. The top-seller of home PCs in the SAR, Acer recently branched out into low-cost mini-notebooks. Smaller than a typical sub-notebook PC, the 1.32-kilogram TravelMate 310 costs $13,680, making it cheaper than Japanese rivals such as Toshiba's Libretto 100CT and Sony's Vaio 505G/GX, which cost $15,000 or more. Most of these other PCs were parallel-imports - sourced directly from overseas rather than through authorised local distributors and, consequently, did not have a local warranty. Four months ago, Acer launched a low-cost desktop PC for $7,650 - excluding monitor, CD-Rom and modem - using Intel's then just-released Celeron 266 MHz, low-cost microprocessor. Acer also expected demand to grow for its low-end servers, which were expected to account for 70 per cent of the company's server business this year, compared with 50 to 60 per cent last year, Mr Mak said. With its low-cost advantage, Acer won the top ranking in the Hong Kong home PC market in terms of units shipped, according to International Data Corp. It had maintained third position in the PC market by unit shipments, and had achieved growth above the industry average, IDC's senior PC analyst Kitty Fok said. With a 16 per cent share of the PC market, Acer recorded growth of 22 per cent in the first quarter, double that of the industry overall, IDC said. Aimed at an emerging market segment comprising frequent business travellers, sales agents, professional women and students, the TravelMate did not compete directly with the two other kinds of portable PCs - high-powered notebooks and handheld PCs - because of different price and performance levels, Acer product manager William Lau said. But he said the new mini-notebooks would put pressure on sales of existing sub-notebooks, such as HP's Omnibook, which were heavier, bigger and more expensive, while their performance was similar. He said the A5-size TravelMate was unique because it had a full set of built-in I/O ports, including a universal serial bus port, an internal 56 kbps modem, an external 24X CD-Rom drive and Windows 98 software. Acer aimed to sell 1,000 mini-notebooks per month in the SAR. 'It is a huge amount,' Ms Fok said. 'Acer sold only 2,200 notebooks in the first quarter in the SAR, and 3,000 to 3,500 a quarter on average in 1997.' Only 10 per cent of notebooks sold in the SAR in the first quarter were mini-models, according to IDC. Ms Fok had reservations about the future of mini-notebooks. 'There are buyers [of mini-notebooks], but the growth is limited.' Sales of mini-notebooks in Hong Kong in the first quarter rose 8 per cent year on year, but were expected to decline by more than half in the second quarter, she said. This was because IBM and Digital had replaced old mini-notebooks - ThinkPad 600 and HiNote Ultra - with more powerful designs, which were no longer mini-notebooks under IDC's definition - 1.13 kg to 1.81 kg with no internal floppy drive. Japanese vendors such as Toshiba, Sony and Panasonic are key players in mini-notebooks. The model would face increasing competition from more powerful Windows CE-based handheld PCs, Ms Fok said.