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Channel squeezed by Government spending

Channel squeezed by Government spending

Channel companies continue to be squeezed by fewer opportunites while big players dominate the market.

Compounding the situation is the small margins on offer with many government tenders – the NSW Department of Education and Training (DET) netbook tender being a prime example. The shortlist for the tender was announced last week with ASI Solutions coming up against Acer, Asustek, Dell, HP and Lenovo on the device tender.

Seen as a key part of the digital education revolution, the tender is worth hundreds of millions of dollars and will see 197,000 year 9-12 secondary students allocated computing devices that cost less than $500. A second tender for the rollout of wireless connectivity to all schools to support the devices includes NEC, Lenovo, IBM and ASI Solutions.

ASI product manager, Craig Quinn, cited a shift towards tier-one multinational companies and more Government agencies appointing a single supplier with one backup – making it more diffi cult for the company to win contracts. Despite the tougher conditions, however, ASI is hoping to grab a slice of both tenders.

“They have eased some of the requirements in terms of the initial specifi cations and looking to keep the costs down,” Quinn said. “But they are also looking for the best bang for buck. It’s certainly not going to be a margin-rich win for whoever is successful. They won’t make a lot of money out of the margin. You’d have to weigh up why you are bidding for it, but we are quite comfortable with that.”

Conway agreed the margins would be slim and called on the Government to temper its demands for the lowest possible price in tenders.

“A lot of the main vendors – and we have seen this with Microsoft and the hardware vendors – their preferred model is channel, even Dell has taken that model,” he said. “They don’t have the arms and legs to do it and if Government squeezes they are going to be squeezing out Australian jobs if they squeeze that channel.”


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