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Editorial: By hook or by crook?

Editorial: By hook or by crook?

A couple of big international PC vendors would have to be currently down on their knees, eyes cast to the heavens, giving daily thanks to Victoria's state-funded education system.

With IBM landing a $92 million, 40,000-notebook deal late last year and Acer last week declared the winner of a $35 million tender for 21,000 desktops, the Victorian Department of Education, Employment and Training is a godsend to both of them.

Regardless of what else happens in their annual reporting calendars, large chunks of their revenue targets are signed, sealed and delivered. But at what cost to the local industry?

Speculation is rife among the white-box channel about how the deals were done, with everything from the sublime to the ridiculous thrown up as possible scenarios. So incensed are some quarters of the local industry that I understand concerns over the Acer tender have been escalated to the ministerial level.

Clearly, these were hugely important deals to the big vendors. They all wanted to get in on the action and much pressure was brought to bear on the decision-makers at DEET. It is believed none other than multibillionaire Michael Dell himself, baron of Dell Computers, personally called the former general manager of information technology at DEET, Paul Doherty, to pitch his brand.

Doherty would neither confirm nor deny this, but, if true, it demonstrates just how significant these deals are to the bidding parties.

Meanwhile, more than one source has suggested that IBM "bought" the notebook deal with a pricing structure that would see its local PC division losing money. Integration with back-end servers and solutions created ongoing opportunities and the sheer amount of revenue involved made the deal attractive, regardless of the cost.

With Acer reportedly having done a great job with the previous notebook deal three years earlier, it was thought by many to have been a shoo-in this time around. There was a large degree of surprise when it was out-manoeuvred at the death by IBM.

Being cut out of the notebook supply arrangements surely would have intensified the urgency at Acer to find something to fill the revenue hole.

Personally, I don't for a minute doubt the rectitude of IBM or Acer in either of these deals, but I do recognise the desperation of vendors to win them in this current climate. It's not every day tenders of this magnitude come up, and when they do, the flow-on benefits to ongoing business are enticing.

I also feel government authorities should be engaging the local industry. Australia's white-box assemblers have repeatedly proven they can match it with the biggest global suppliers on performance, reliability, service and quality control. By some standards, they in fact exceed the brand names in these areas.

The only area where the local industry can't play the game as well is in sales and marketing.

The big international vendors have vast resources and a bevy of smooth-talking flesh-pressers who are experienced in closing the big deals. They have the ability to rapidly react to customer negotiations, they have the wherewithal to make things happen when required and they have the movers and shakers that can be called in during a crisis.

Anyway you look at it, it was a good Thanksgiving for IBM and a happy Chinese New Year for Acer. They are paying homage to the deities while the local industry goes back to the school of hard knocks for a few more lessons in the realities of globalisation.


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