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Editorial: Playing the name game

Editorial: Playing the name game

Two years ago, it could be argued there were two local system builders with a chance of establishing themselves as genuine Australian computer brands - Optima and Ipex.

If anybody feels like laughing at that suggestion, remember that even as recently as the second quarter of 2003, according to unit shipment figures from market analysts at IDC, Optima was the fifth largest PC vendor in the country. Its 5.6 per cent market share put it ahead of Apple and Toshiba. It was only 0.7 per cent behind Acer and just look at the giant strides the Taiwanese vendor has made since. Ipex never quite got to 2 per cent of the local market, but it did have a government outsourcing model that was good enough to export as far afield as Germany.

But things have a habit of changing quickly in this industry and, as we move towards the end of 2005, the local PC market is a very different place for local builders to operate in. Acer is rubbing shoulders with the likes of HP and Dell these days at the top of the charts while Optima has unfortunately gone back in the betting.

This is not a criticism of the NSW-based builder - in many ways it has been a victim of its own success. Dell and Acer have led the way in narrowing the price point gap between branded and non-branded machines to such a point that it is no longer a major consideration.

For Ipex, its flagging sales can be linked directly to its merger with systems integrator, Volante, about 18 months ago. While the Volante model once saw it leading with product, it has been transitioning itself into a managed services player and that shift has only accelerated since the changing of the guard that saw Ian Penman taking the reins from Allan Bracken.

And despite being in a position where it is building its own boxes, Volante has had to balance that with its position as a tier one partner of HP and other leading brands. With price no longer a differentiator for local builders, it is hardly surprising to see it throwing the majority of its weight behind its HP relationship.

Acer has been the most aggressive and targeted of the mainstream vendors in aiming its firepower at the local builder community. When company president, JT Wang, visited these shores in March last year, he noted that it would be much easier for a branded vendor to take share from the whitebox market that it would to wage an expensive marketing war against another leading brand.

A combination of low prices, extensive range and marketing muscle saw Acer taking share from whitebox, which was too fragmented to fight back in any meaningful way, and the other major vendors have followed its lead. The bottom end of the market is now virtually impossible for a local builder to make any money from these days and yet, according to IDC, it is still the major reason why end-users consider buying whiteboxes.

So is it all over for the local builder community? Absolutely not - savvy players have turned their attentions to the top end of the market, where there is still a good living to be made and users are smart enough to know that what's inside the machine is far more important than the logo.

As for Optima, its history in education and government should see it continue to have some success in that market, although it seems unlikely it will claw back the ground it has lost to the multinationals.

But change isn't always a bad thing and diversification could end up being the best thing that ever happened to the company if it plays its convergence cards well. And although it has been doing some hard yards in that category to date, that was always going to be the case. In revisiting its consumer electronics strategy, Optima has now decided to open its range up to the traditional IT channel - something the major vendors have been reluctant to do for fear that discounting would quickly bleed all the margin.

Although its hand has been forced to some degree, a broader Optima with a smaller but stable education and government business coupled with a range of convergence products aimed at the digital home market could make it stronger.

The jury is still out on whether Optima can transcend the system builder ranks. How successful its IT channel can be in selling its convergence products will go a long way to determining the answer.


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