PC Customizer Pursues GSA Strategy

PC Customizer Pursues GSA Strategy

By Nick Wakeman
Staff Writer

Government Acquisitions Inc., Cincinnati, is banking on a close relationship with two of the top makers of desktop computers to boost its revenues by a robust rate of 35 percent annually.

In 1996, the company made $14 million, and it is on track for $18 million in sales of customized PCs this year, said company president Dennis Obial. In keeping with the name of the company, most of those sales are into the federal market.

Government Acquisitions photo

Dennis Obial, president
of Government Aquisitions

"We want managed growth, not something outlandish," said Obial. His company specializes in taking base units from Micron Electronics, Nampa, Idaho, and Gateway 2000, North Sioux City, S.D., and customizing them to meet particular user needs such as added security features, removable hard drives and high-end video capabilities.

Government Acquisitions, which is classified as a small, disadvantaged business under government regulations, is Gateway's only partner on the General Services Administration schedule and one of three companies selling Micron products on the GSA schedule.

Both Gateway and Micron have worked with Government Acquisitions for several years on individual contracts. And in separate moves this summer, Government Acquisitions added Micron and Gateway products to its GSA schedule. Hughes Data Systems, Irvine, Calif., and Pulsar Data Systems, Lanham, Md., also sell Micron products on the GSA schedule.

While both of those companies have successful GSA schedules of their own, it was Government Acquisitions' ability to customize the hardware manufacturers' products that led them to expand the relationship, Micron and Gateway executives said.

Obial said he has a clear understanding of his role with the two large computer manufacturers. "We aren't out to compete with them," he said. "I don't go after their business."

Instead, he sees his company fulfilling a need that neither Micron nor Gateway can meet because the size of the two manufacturers makes customization difficult, he said.

"They have an ability to supply solutions that Micron might not be able to," said Ron Clevenger, Micron's federal sales manager.

Government Acquisitions' business model and Gateway's complement each other, said Jim Connal, federal sales manager for Gateway. Even though Micron and Gateway use a build-to-order model, economies of scale make it difficult for them to offer features that are only requested occasionally, Connal and Clevenger said.

The demand for some features is just not high enough for Micron to make them regular options, Clevenger said.

Using a company that can fill the niche demand for more customized products is a good strategy, said Payton Smith, an analyst with the research firm International Data Corp., Framingham, Mass.

"The success of the build-to-order model shows how much customers like to customize," Smith said. "If Government Acquisitions can enhance that, it will only benefit what Gateway and Micron have to offer."

Both Gateway and Micron have done well in the federal market. Gateway is the second largest supplier of desktops with 65,260 units or 13.8 percent of the market in 1996, Smith said. Micron was fourth in 1996 with 42,026 units or 8.9 percent. Dell Computer Corp., Austin, Texas, is the top supplier with 94,500 or 20 percent of the market.

Nearly all of Gateway's sales to the government have come through the GSA schedule. "The use of the schedule has grown dramatically and we've benefited from that," Connal said.

Founded: May 1989
1996 Revenues: $14 million
Projected 1997 Revenues: $17 million
Employees: 20
Increasing the flexibility of Gateway products on the GSA schedule was an important factor in forging the relationship with Government Acquisitions, he said.

Gateway is not planning on more partners and will only add other partners when they add some sort of value to Gateway's products, Connal said. Letting Government Acquisitions put Gateway on its schedule was a culmination of a seven-year relationship, he said. A long-term relationship can only be built through trust, he said.

Obial said he sees no conflict with selling competing products on the schedule. Each product line has its strengths, he said. "We let the customer's requirements direct us to the right product," he said.

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