Dunn, Acer join to offer PCs to feds

Dunn Computer Corp. announced a deal last week that will have the company providing its federal customers with PCs made by Acer America Corp. The PCs will bear the brand name "Dunn by Acer" and will be available on Dunn's federal contracts.

Under the agreement, Acer will build desktop and portable computer products in large volumes, while Dunn will provide a conduit to federal customers that have eluded Acer's sales efforts. Dunn also will provide the sales and support services that federal customers demand and will customize Acer PCs with specialized hardware and software as necessary.

Bill Hughes, vice president of marketing for Dunn, said the company should be shipping Acer PCs to customers before the end of the federal buying season Sept. 30. "That was our intention here," he said. "We have demonstration units now and will be shipping within 30 days."

The company anticipates selling the Acer PCs on its Air Force Desktop V contract, General Services Administration schedule, blanket purchase agreements and any other sources of large orders, Hughes said.

The deal will help Dunn meet the government's demand for PCs, Hughes said. In the past, Dunn has had to pass on orders that call for large numbers of PCs to be produced in a short time because of Dunn's limited manufacturing capacity, Hughes said. He noted that Acer has the production capacity to turn out tens of thousands of PCs in a month or two to fulfill such orders.

"The agreement brings us the ability to compete more effectively with fast delivery and low price," Hughes said. "It is difficult for us to build 20,000 units and deliver them for the next 60 days and still build for our existing customers."

The deal calls for Acer to dedicate a million square feet of manufacturing space to building the Dunn by Acer PCs. In addition, it gives Dunn a brand-name product to offer. While Acer might not have the name recognition of Compaq Computer Corp., Dell Computer Corp. or IBM Corp., the company is respected for its quality technology, observers said.

"They have excellent technology and very compelling prices," said Robert Guerra, president of Robert J. Guerra Associates.

But Guerra predicted that the deal probably will have little impact on the buying patterns of federal customers. "I don't see this move causing people to buy Acer when they weren't going to before," he said.

Alan Bechara, vice president and chief operating officer of Comark Federal Systems, said he has seen little demand from federal customers for the Acer products he sells. "Acer has the wherewithal to produce quality machines, but they don't have the market presence," Bechara said.

Guerra noted that too much work by Dunn could erode the thin profit margins on the PCs. The firms apparently have not ironed out details of the circumstances under which Dunn will customize systems and when it will simply sell machines built by Acer.

Hughes said Dunn is likely to play a role in tweaking Acer machines to meet special requirements, even for large orders. "Even when machines are bought in 10,000-unit volume, there are often special requirements associated with it," Hughes said.

But Todd Osborne, senior director of Acer's Government Solutions Division, indicated that Acer will accommodate specialized requirements on large orders covering tens of thousand of units but will leave customization to Dunn on smaller orders. "Only when there are esoteric requirements will Dunn provide integration," he said, explaining that such requirements might include specialized software or security devices such as card readers and optical scanners.

Ultimately, most of the PCs Dunn sells will be made by Acer, Osborne said. "Acer products will fulfill the majority of [Dunn's] future run rate," he said.

That would be a sensible outcome, Bechara said. "The day of the third-tier or clone manufacturers is done," he said. "Hewlett-Packard [Co.], Dell and Compaq are all squeezing the little guy. The question is, 'Will [Dunn] stop manufacturing their own machines?' "

Hughes said Dunn will not relinquish that part of its business. "We are manufacturers, not at all resellers," he said.

-- Carney is a free-lance writer based in Herndon, Va. He can be reached at DanCarney@compuserve.com.