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Trailing its successful thrust into the consumer arena, Acer is aiming at the small business market. And though the market promises growth for big players, unless Acer can take on Goliath, it may hit the wall a few times.

The company first tackled that segment of the server market last October by unveiling the Acer Altos 930 Server. This week, the company is releasing a network-ready version of the server with Internet, Web and communications software that sells for under $5,000.

The small business market for LANs and servers will grow from $2.5 billion in 1997 to $4.1 billion in the year 2001, according to the International Data Corp. (IDC). Servers represent the lion’s share of that spending, and most of that will go for PC servers. And as the number of small businesses with networks grow, so will the number of connected PCs.

Last year alone saw a 21 percent increase for unit shipments of PC servers going into small businesses, says IDC. 1997’s PC server revenues jumped 35 percent to exceed $10.5 billion on shipments of 1.75 million units. IDC forecasts PC server shipments to double over the next four years.

“Servers are at the heart of a growing number of small business networks,” said Susan Frankle, director of server research at IDC. “More than half of network users with under 20 employees now have servers. This is a real sea change from the past–a direct result of manufacturer efforts to build a small business franchise.”

Many small businesses are looking to add networks. What is interesting, says Raymond Boggs, director of small business research at IDC, is the number interested in server-based networks, due to issues of performance, Internet access or groupware.

“With the help of computer dealers and resellers, small businesses are assembling networks that are both powerful and affordable,” said Mr. Boggs. “The major LAN and server companies–3Com, Bay Networks, Compaq, Hewlett-Packard, IBM, Intel and Microsoft–are all paying attention to the market and it’s starting to pay off.”

While the top four PC server vendors–Compaq Computer, HP, IBM and Dell Computer–continued to dominate last year, Apple Computer, NCR, Olivetti and Acer lost market share there. That doesn’t bode well for Acer.

The principal difference between the 930 Server and the newly-released plug-and serve’ 930S is the integration of Microsoft’s 4.0 BackOffice Small Business Server suite. The suite, says Acer, is menu-driven, and covers file, print and application services, Internet Connection capabilities and communications systems.

The AcerAltos 930 Server, which uses Intel’s 558 chip, features two Pentium II 233-300MHz processors with 512K ECC cache, synchronous DRAM slots for 512MB ECC memory and an AGP port. It also incorporates a CD-ROM drive, onboard ultrawide SCSI, video functions on a separate port, an integrated 10/100 network interface card and 64-bit controllers.

The server also includes a tape back-up system for quick restoration of data and configurations in case of disaster; and the CPR, which brings the, server back to the same state it was shipped in.

The AcerAltos 930S Server ships at the end of the month through computer resellers. By Acer’s accounts, the server should sell well, since company executives said demand for Altos 930 Servers came in well over forecast. They “can’t build enough,” one Acer executive said.

Acer thinks its strengths in just-in-time manufacturing and the significant success its PCs have seen in the consumer market set it apart from other server manufacturers in the small business market. Its user-friendly, easy-upgrade features in the self-maintaining, pared-down Aspire line have been popular among home users.

Maybe, says Mr. Boggs of IDC, but not enough to eat into the space of market leaders. Acer’s vertical set-up and the bundled nature of this offering may help it dent that fast-growing–but increasingly competitive–market, he said. But its mere top 10 status won’t help it make inroads due to the already entrenched players it will be butting heads with in that space, namely IBM, Compaq and HP, not to mention Dell, which many small businesses may turn to based on similar positive experiences with PCs.

“Acer’s never been exceptional (in the small business market), but they are hoping to rebuild and redefine their position (there),” said Mr. Boggs. “They have a shot, but it’s an environment that’s been inviting a lot of attention, and one that’s going to get increasingly challenging.”

Mr. Boggs called the product “kind of attractive,” but said he’s been seeing similar products from other manufacturers that are priced even lower, Furthermore, resellers usually install software tailored to the customer.

Ultimately, what may hurt Acer is service and support. Unlike some of the bigger players, who have dedicated teams for customer queries, Acer plans on resellers being the first point of contact for repairs and problems. Some small business owners prefer the one-stop-shop, fix-it-all in one place route, but many want to turn to a support structure within the corporation.

“Issues of reliability come up very high on the small business priority list,” Mr. Boggs added. “And networks are challenging because there are so many different components that have to work in harmony.”