Consolidation in the PC market took another step last week when Acer announced intentions to acquire Gateway. If all goes to plan, the purchase will see the Taiwanese manufacturer leapfrog Chinese rival, Lenovo, into third place in terms of global PC sales. But, as we saw with the integration of HP and Compaq, there is likely to be a long and arduous road ahead.
Investors have already started twitching, with Acer's share price taking a hit two days running after the announcement amid concerns it has paid too much for its cow-boxed competitor and will struggle to manage the multi-brand integration of Gateway, its eMachines subsidiary and Packard Bell. Some industry watchers have suggested Acer would have been better continuing its organic growth in the US market, which has been running at over 100 per cent in recent years, instead of reaching for its chequebook.
As far as the Australian market is concerned, local Acer executives are refusing to comment on whether the deal will see Gateway PCs back on the shelves. Gateway packed up shop and pulled out of the Australian in August 2001. Personally I believe there's little point in adding another badge to a local PC market that is already littered with too many brands but a niche retail play at some stage wouldn't be overly surprising.
One local PC manufacturer that will be sighing with relief, if not quite popping champagne corks, is Optima. It has been in freefall in recent years as its core government and education business was aggressively targeted by multinational competitors and its consumer electronics diversification strategy floundered. But results posted last week saw it back in the black for the financial year to June 30 although revenues continued to slide. Let's hope Optima can consolidate in the year ahead.
A couple of government announcements in the past week were nothing but good news for local builders and integrators. Optima was one of half a dozen Aussie companies listed on the NSW Local Government Procurement panel for desktops, notebooks and servers. Although not compulsory, the state's councils are expected to use the contract as a starting point for procurement and it is expected to be worth in the region of $10 million.
In Queensland, Data#3 has been confirmed as one of three companies on the state's first whole-of-government contract for desktops, notebooks and servers. The contract is valued at about $100 million over three years but, more importantly, is being touted as a landmark decision by the Brisbane-based integrator. Hardware procurement is only one element of IT service delivery and integrators are in a better position to offer purchasing advice than vendors that are only ever going to suggest the purchase of their own equipment. Other governments would do well to take note.
While UXC released impressive financial results, Commander has had a horror year. An annual loss of $5.3 million has been blamed on order processing problems and delays with rolling out its franchise strategy. The Commander management team is claiming the systems problem has been rectified but, as a listed company, is now under real pressure to prove it.