SAN FRANCISCO/TAIPEI: As the PC industry embarks on its fitful road to recovery, many are betting that Taiwan's Acer and HP will lead the rebound with surging netbook sales and a strong presence in booming Asia.

These two PC makers are expected to gain from consumer demand in China, India and other resilient Asian markets, even as corporate demand stays weak in the global economic slowdown.

Acer, the world's No. 3 PC brand, can bank on its strength in the fast-growing low-cost netbook segment, while HP's broad customer base and product mix will stand it in good stead.

"Acer will more likely recover quicker because they're doing well in the pockets that they're in... they're one of the lower cost providers out there that is still respected," said Louis Miscioscia, research director at tech-focused U.S. firm Brigantine Advisors.

"In this bad market, someone might be more willing to give Acer a chance, maybe before they would have bought an HP or a Dell or something else."

Money from China's $585 billion stimulus package is spurring growth in netbooks - cheaper laptops with fewer features - with consumers in the world's No.2 PC market after the United States making use of the scheme to buy their first computer.

Acer dominates the netbook PC segment, shipments of which research firm IDC forecast will more than double this year to 26 million units, helped by consumers reining in on their discretionary spending.

This has pushed up valuations at the Taiwanese firm, which trades at a relatively high 18.3 times forward earnings, bolstered by a 90 percent advance in its stock price since the start of this year.

In contrast, HP trades at 11.6 times, while Dell trades at 14.3 times, according to Thomson Reuters data.

Despite the high valuations, most analysts still favour Acer as it remains firmly in the driver's seat until corporate IT spending recovers, helped by its dominance in the low-cost segment of the market and a lean cost structure.

HP is also expected to come out ahead, since the company already has a kickstart with consumer demand that has shown signs of picking up, and an additional boost when corporate demand returns. Its shares are up about 25 per cent so far this year.

HP, the world's largest PC brand, is also strong in Asia, in particular India and China, where it is the first- and second-ranked PC brand, giving it the critical mass needed to compete in the two large and diverse markets.

"HP's greatest strength is how it is able to provide a total solution to most users, by selling an entire package of a server, a printer, a PC, everything," said Tracy Tsai, a Gartner analyst based in Taipei. "That's what will really help them and set them apart."

Dell, Lenovo lag

A broader recovery in PC demand is widely viewed as unlikely until the second half of 2010, when gun-shy corporations finally begin to upgrade or replace outdated equipment in a "refresh cycle".

Bernstein Research forecast PC unit growth will shrink 2.5 per cent in 2009, but grow 11 percent in 2010 on renewed corporate demand.

Lenovo and Dell are therefore likely to underperform until then, largely due to their heavy reliance on corporate spending.

"Dell is a laggard because it has relatively high corporate exposure. The strength in the PC market this year has really been driven by consumer as opposed to the corporate market," Broadpoint AmTech analyst Dinesh Moorjani said.

Both Dell and Lenovo have not given any forecasts on revenue growth this year, in contrast to HP and Acer, which have both said they expect to see sales growing in the coming quarters.

Dell is also comparatively smaller in fast-growing emerging markers such as China, a point its president for small and medium businesses, Steve Felice, made during a recent call with reporters.

The launch of Microsoft's next-generation Windows 7 operating system is now the remaining wild card in PC makers' outlook. Such software launches have often spurred sales, but paired with an economic slowdown, the response could be lukewarm.

A recent survey of more than 1,000 companies by ScriptLogic also found that some 60 percent of them planned to skip Windows 7 on cost and compatibility fears.

Lenovo's Chief Financial Officer Wong Wai Ming also attested to those fears in a recent interview with Reuters.

"Many CFOs are especially sensitive to cost right now, and will not increase capital spending just because the economy seems to be doing better now," he said.