Fighting those big, bad multinationals

Groan. Another Aussie PC builder in trouble. One wonders if the remaining local box boys are heading for their death throes. Surely if Optima can’t do it, nobody can. Optima Technology Solutions was once the largest of the local manufacturers flying the flag for their country up against the might of the multinationals.

Maybe a merger with a like-minded competitor would have saved them. Ipex’s Schwalb brothers did it in 2003, selling out to big ASX-listed system integrator Volante. Channel Insider is also reminded of Edge Technology’s spectacular collapse in 2000, along with its failed ISP eisa. The owner’s were declared bankrupt, leaving thousands of dealers out in the cold.

We had always bet Optima would survive volatile market conditions, the local hero always ready to give those big American bullies a run for their money. And at times, the outfit did a pretty good job of it. Electronic ordering capabilities and its metropolitan and regional reach won Optima a $5 million deal to supply 1400 notebooks and 4600 desktops to the RTA in early 2006. It even replaced an incumbent Dell on that contract, but more on
that later.

In mid-2006, it won a $15 million deal to supply the ACT Department of Education and Training with hardware and services. During that financial year, Optima had delivered around 40,000 systems to the government sector. This mob even rolled out more than 30,000 PCs to the Department of Defence between 2002 and 2004. Government sales made up 50 percent of the company’s business, particularly in NSW.

Lately, however, it looked like things were starting to go a bit pear-shaped, particularly when the builder’s business with the local education sector started to fall away. A $5.1 million loss for the half year ending December 2007 due in part to its acquisition of retailer Digital City. The loss of its preferred supplier status at the Department of Education and Training in Queensland and NSW would have stung. In recent years, Optima was forced to cull staff numbers to reduce its overheads.

An admission to the Australian Competition and Consumer Commission (ACCC) late last year that it engaged in resale price maintenance also probably didn’t do the company’s reputation much good.

In some ways, you’ve got to feel disappointed for Cornel Ung. He’s been on the PC scene since his humble beginnings building around 10 boxes a week for fellow students at Macquarie University in the mid-1980s. An entrepreneur at heart, he founded PC retailer Australian Budget Computer, operating from a small shop in Sydney’s West Ryde, before trying his luck at computer manufacturing.

In 1990, as PCs were becoming increasingly popular, Optima was conceived. It grew fast, doing business with hundreds of dealers.

Despite the dotcom carnage in the late 1990s, the company managed to survive. By 1996, Optima had been named BRW’s “Growing Company of the Year”, and won its first government contract with the NSW Department of Public Works. In 2003, it was ranked the number one Australian PC manufacturer. Cornel had gone from backyard operator to a PC-building big gun.

So, what happened? Channel Insider speculates that apart from education’s decision to move to a single supplier, a poor decision to move into PC retail, and a failure to embrace the dealer channel, Optima, without a doubt, took a pounding from our low-cost, channel-unfriendly friends at Dell.

Ah, Dell. Boo hiss! The old thorn in the local PC industry’s side. Those guys are everywhere and we mean everywhere! There’s no escaping the brand. We’re not just talking about glossy flyers in the Saturday papers here. Who’d have thought that the Dell logo would turn up at least six times during Channel Insider’s lazy weekend viewing of the
recent Hollywood blockbuster Ocean’s Thirteen.

Damn, Eddie Jemison even starred as “Livingstone Dell” in the flick. Was that a coincidence? Not a chance. Talk about product placement.

Channel Insider also learnt the other day that Dell wants to trademark the commonly used term ‘Cloud Computing.’ The company has defined Cloud Computing as “design and consulting services for data centres and mega-scale computing environments”. It’s entering the home stretch of the US Patent and Trademark Office approval process. Geez, how does an Aussie box builder compete with that?

Seriously, Optima’s demise is a kick in the guts for the Aussie industry. You’ve got to wonder what the future holds for local PC builders fighting for a share of state and federal government-preferred supplier lists.

What do they have to do to survive further onslaughts from the cashed-up multinational powerhouses of Dell, HP and Lenovo? ASI, Pioneer and TodayTech?

Got any thoughts?
Email editors@techpartner.news with your ideas on the subject.