If you thought the days of locally assembled PCs were over, you probably haven’t heard of Silicon Systems.
The privately-owned Wellington company, which assembles PCs in Petone, has just won a deal to supply desktop PCs to Statistics New Zealand, beating two other short-listed vendors to a contract valued at up to $1.25 million.
At the same time as Silicon won its contract, Axon won a non-exclusive deal to supply Statistics with HP laptops. However, Silicon will soon launch its own laptop brand and target that side of Statistics’ business as well, says sales and marketing manager Liam O’Keeffe.
The local assembly market suffered greatly around 2000 when Dell arrived and the price of PCs plummeted, O’Keefe says. However, Silicon took a different approach from many of the other manufacturers, focusing on corporate customers, and especially the government sector.
“Historically we have a good relationship with the government sector,” he says, citing past clients such as the Department of Survey and Land Information (now LINZ), Terralink, Defence and NIWA.
“We don’t get caught up in ‘drop your pants, discount Dan’ pricing,” O’Keeffe says. Silicon supplies the New Zealand Racing Board (TAB) with its desktops and wagering hardware for pubs and clubs, he says. It also still supplies Defence, the Government Communications Security Bureau, Met Service, Justice and Foreign Affairs and Trade.
O’Keeffe says people in government often stay within the sector and take their experience of a supplier with them to new jobs. That was the case at Statistics, he says. Three people there used to be at LINZ when Silicon supplied its desktops and remembered the company favourably.
The company also put its efforts into quality and service, he says, claiming Silicon was the first local assembler to achieve ISO 9001 certification.
IDC PC hardware senior analyst Liam Gunson says local manufacturers are included in IDC’s “other” category when it does its market analysis. While there may be some smaller multinational suppliers in that category as well, he says, the category captured just 15.2% of the market in the second quarter of 2007.
Gunson says local assemblers who target the consumer or small business segments are suffering. However, those that target niches such as government and education can still succeed. Gunson says they can pick up server deals, while desktop supply deals are less common and a big laptop deal would be a “surprise”.
That’s exactly the segment, and a growing segment, that Silicon Systems is now targeting.
O’Keeffe says laptop supply has been a problem for Silicon, which has until now resold Sony gear. However, those laptops now come preloaded with Microsoft’s Vista operating system, he says, and 99% of government users want XP.
“We’ve been planning on doing our own notebooks for a while,” O’Keeffe says, adding that the company has been waiting for Intel’s Santa Rosa chips to arrive before making the move.
“Notebooks are personal. You’ve got to sell notebooks that look nice too,” he adds. Silicon has finally found one that meets its requirements, from Chinese manufacturer Amoi, and has a sample in the country.