Local PC manufacturers will continue to lose government and enterprise business to the multinationals if they do not adopt a value-added proposition, an industry analyst has warned.
The comments follow the news that Australian vendor, Optima, was unable to secure a share of the latest Department of Defence (DOD) PC refresh tender against international vendors. It was not alone - no local vendor was given a share of the 20,000 unit deal.
Chairman and managing director, Cornel Ung, said it had worked with DOD for the past three years, supplying a total of about 30,000 PCs. It had expected to supply about 10,000 units this time around, he said.
"We have been successful in the last few years with this contract," he said. "The desktop refresh happens every 12 months."
However, Ung said the contract had now passed over to two international PC vendors. He attributed the loss to fierce competition on price. "It is disappointing that they have chosen not to award this to local companies," he said. "The problem is the decision was made on price value. The multinationals have the muscle to win out on price."
Gartner PC and systems analyst, Andy Woo, agreed local manufacturers were finding it more difficult to compete against the multinationals on price. While whitebox builders had once held a price advantage, international vendors now offered more aggressive deals to government and enterprise customers.
It came as no surprise that local non-branded vendors were losing this type of business, Woo said.
"Whitebox doesn't have a price advantage any more," he said. "Branded vendors can play a longer game because they have deep pockets. They can make margin from different services - PCs are just a foot in the door."
Multinationals also tended to offer a lower cost of ownership than local vendors, Woo said.
Optima and fellow local PC builder, ASI Solutions, suffered a similar setback in the NSW Department of Education's Technology for Learning Program last year.
At the time, Ung told ARN he was upset Australian vendors only represented 33 per cent of the first year's allotment. The remainder went to IBM. He blamed the shift to an international provider on the department's recent adoption of a more centralised and corporate-style procurement policy.
Woo said it was now up to the local players to reposition themselves away from box moving and focus on the value-adds they contribute to the deal. These could range from extended warranty support, asset management, channel support and outsourcing back-end tasks.
Ipex director of products, Shayne Taylor, insisted local vendors could still win tenders provided they kept adapting with the changing market. "It gets tougher every year - not just for locals, but for the multinationals as well," he said. "Competition is hard and fierce. You just have to work out which space you play in."
Taylor disputed local providers were not getting a fair go at government contracts, arguing that any vendor, regardless of size, had to meet global best practice in order to score the deal.
"Our government shouldn't prop up locals who are not globally competitive," he said. "We still believe we can more than compete. If the deal is only on price, you just have to know that's what you are up for."
Ung said Optima would now focus on adding more value to its government business in order to secure future contracts.
It had already increased its deal with the NSW DET this year, and was working with several other departments on upcoming contracts, he said. The DOD had not provided comment on its latest PC refresh at the time of press.