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Acer Seeks Refuge in the Cloud

Acer is going to buy iGware, a low-profile American cloud computing company

In distress and losing ground to iPad, Acer is going to buy iGware, a low-profile American cloud computing company. It's reportedly paying $320 million in cash and stock plus a possible $75 million performance-based payout.

Reuters says the $395 million total makes it the fifth-largest acquisition of a US company by a Taiwanese. The largest deal to date was Acer's $761.5 million acquisition of Gateway in 2007. The Wall Street Journal says the iGware deal calls for Acer to issue $170 million in new shares and peel off $150 million in cash.

Nintendo is supposedly a big client of iGware and, according to Acer chairman J.T. Wang, will pay Acer $20 million-30 million in service fees every year. However, Reuters couldn't get Nintendo to confirm it does business with iGware let alone talking to Acer about a potential partnership.

Of course, Acer, which has been bleeding serious worldwide market share, needs the money. It was sandbagged by the popularity of the iPad, fired its CEO Gianfranco Lanci over its mobile strategy, slashed its shipment forecasts and has been working through a $150 million inventory crisis while it tries to get in front of the mobility wave.

It's expected to report a loss for the second quarter but is promising to return to profitability in Q3 and post a small profit for the whole year thanks to an ultra-thin notebook it expects to put out in Q4.

The iGware deal is expected to close in late September and Acer is supposed to launch an Acer Cloud product integrated with iGware and built on an open platform next year. Acer said this cloudware will be integrated into "all Acer products, including PCs, tablets and smart handheld devices."

iGware, which will become the Acer Cloud Technology Company, has cloud software and infrastructure tools - including "device eco-systems, virtual consoles and personal cloud" - that reportedly support something like 100 million consumer devices worldwide, including Nintendo game consoles.

There are doubts about the wisdom of the move and whether Acer really needs its own cloud. Acer calls it a mid- to long-term investment.

Acer is also setting up a mobile operation in China.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

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