In a remarkable coup for an Australian IT company, Sydney-based TodayTech has been granted one of just four lucrative Intel CPU and motherboard distribution contracts in China.
The deal could be worth more than $US200 million per year and pits the company against some of the global giants of IT distribution.
TodayTech will compete for a slice of the rapidly growing $US1.2-$US1.5 billion CPU market for Intel. Existing players include Ingram Micro, a Synnex subsidiary called Laser Computer, and Hong Kong-based, ArCon Technology.
CEO of TodayTech, Jack Zhong, said that the signing of the Intel distributorship was the end result of a long and slow process to expand his business into the region.
"We first opened in China in 1997 and have been slowly building the business there," Zhong said. "It was only two years ago that we really started focusing on it. The Intel agency will provide a terrific boost to our business there."
TodayTech now employs "about 100" staff across three business divisions and operates out of six branches in Hong Kong, Guangzhou, Shanghai, Beijing, Chengdu and Shenzhen.
As well as distribution, TodayTech's China operation has a software development division and a systems integration business.
Zhong said he had reached agreement with Intel in late 2002 but the terms were only finalised in March.
Zhong would not be drawn on what Intel CPU market share he would garner from China but agreed that 25 per cent was possible.
However, the Intel agency will also open avenues to many other distribution, software development and systems integration opportunities. It is likely to be able to leverage the Intel partnership to get similar deals with other vendors it distributes for in Australia.
"We are looking to generatw about $US200 million [in annual revenues] and that is just in Intel products," Zhong said.
TodayTech had spent about $US1 million to date in setting up its Intel business in China, Zhong said. It had also set aside a further $US5 million for infrastructure upgrade in China over the next two years.
Zhong expected to spend $US2 million in the next 12 months.
For more on TodayTech, see this week's issue of ARN.