The revolution in Israel’s IT market is now underway. Sources inform ''Globes'' that Dell Computers (Nasdaq: DELL) local affiliate Dell Israel has won the IDF’s multi year computer tender. Dell Israel will supply 50,000 PCs to the IDF over the next three years at a total cost of $20 million.
The IDF tender is thought to be the largest of its kind in Israel and is divided into three categories: laptops, PCs and servers, with the procurement costs financed from US military aid to Israel. The previous IDF tender for servers, considered the largest of its kind, was won by IBM Israel, which beat a rival offer by Hewlett Packard (NYSE: HPQ). Dell Israel’s winning bid for the latest tender beat a rival offer from the Lenovo Group (HKSE: 09924; LSE: LNV; LNVGY.PK), formerly IBM’s PC division.
As reported in “Globes”, the IDF has been planning for some time to move to a “Thin Client” workstation system, which will be introduced later this year. However, PCs will still dominate IDF desks until at least 2008. In a related development it has been announced that Dell and HP are the winners of the government’s periodical tenders for the supply of PCs and laptops. The winning bidders will supply around 500 laptops and 2,500 PCs to various government offices over the coming months.
The tenders were announced three months ago by the Ministry of Finance’s Accountant General’s Office and is valid for four months, following which the Ministry of Finance will review its specific procurement requirements from suppliers under the terms of the tenders and update them if necessary.
Sources inform ''Globes'' that a number of computer suppliers such as HP and Acer Inc.(Taiwan: 2353; LSE: ACID) jointly won the PC tender and will supply the government with computers using the Advanced Micro Devices (NYSE: AMD) Athlon processor. In the tender for PCs, AMD’s processors competed with Intel’s Pentium 4 processor.
Dell is the big winner in the laptop tender. It won in two out of three categories in the tender and will supply the government with laptops using Intel processors. HP won the third category. The successful bid for the tenders has raised Dell Israel’s local presence to a new peak. Managed by Ra’anan Biber, it first began operating in 1999 and transacts it sales solely through a network of eight marketing agencies, rather than direct retailing. Dell Israel’s sales in 2005 totaled 38,000 units, and the new orders for government ministries will substantially increase the company’s activities in Israel
The big loser is Lenovo, IBM’s former PC division, which focuses exclusively on PCs, and suffered a heavy blow after the failure of its bids for both the government and IDF tenders.
Sources inform ''Globes'' that the units were sold to the government at a substantially lower price than that on the private market. The PCs will cost the government NIS 2,000 each and the laptops NIS 4,000 each. Market sources said that that the computer suppliers are likely to absorb losses on the prices they committed to in the tender, since these are lower than those they paid to manufacturers.
Published by Globes [online], Israel business news - www.globes.co.il - on May 23, 2006
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