“Off-White Paper” #1 The GSA Schedule Results

And the Winner Is . . . The numbers are starting to come in, and they will make a splash in the October/November timeframe. But in the meantime, here are my thoughts, guesses, crystal ball viewings, chicken bone readings, and insightful analysis as to what it all means. Dell is going to kick butt (a technical phrase; KB in government jargon) on the combined A, B/C, and services Schedule. From what I have learned (especially from the chicken bones and tea leaves), Dell will break the $500 million mark (Yes boys and girls, a half BILLION dollars, U.S.) and leave the competition (?) in its dust. The top five should read something like this: #1 Dell — $550mm #2/3 GTSI (when combined with BTG) — $300mm #2/3 Gateway — $300mm #4/5 IBM — $175mm (services, not PC’s) #4/5 Micron — $175mm Who knows when really accurate numbers will be out. Dell is doing something much better than the rest of the Schedule world, and we’ll get to that soon. The top five will represent more than one third of the total for Group 070 (IT), and the top ten will represent more than half of the total. Once you’re out of the top 20, you’re pretty much out of any serious money! But first, let’s get a little history. 1991 Top 10: #1) GTSI ($93mm), #2) Zenith ($41mm; lot of TVs, huh!), #3) Compaq ($39mm), #4) Dell ($27mm), #5) CompUAdd ($10mm), #6) Grid ($7mm, under Ro Parra, now at Dell), #7) Govt Micro Resources ($6.5mm), #8) Bohdan ($5.3mm), #9) BDS ($3.2mm), #10) everybody else with about $.075 1993 Top 10: #1) GTSI ($82mm), #2) Dell ($64mm, another big growth spurt), #3)Compaq ($43mm), #4) Falcon ($30.5mm), #5) Zenith ($30mm), #6) BDS ($29mm), #7) AST ($17mm), #8) Bohdan (bought by AmeriData, $16mm), #9) JWP (bought by Entex, $10mm), #10) Advanced Computer (bought by BTG, in their move into the product arena, $8.5mm) (NPR kicks in here, as do the first of several new laws, starting with FASA.) 1994 Top 10: #1) GTSI $100mm), #2) Falcon (bought by GTSI, $58mm), #3) Bohdan/AmeriData ($47mm), #4) Dell ($26mm. At FOSE this year Ro Parra asked me how Dell could double Schedule sales. I didn’t have an answer. He appears to have found one, anyway.), #5) Toshiba ($23mm), #6) NEC ($21mm), #7) IHS ($21mm), #8) Zenith ($20mm), #9) AST ($19mm), #10) I-Net ($16mm). Gateway came in at #15 with $12mm, but only had a Schedule for about three months. 1995 Top 10: #1) GTSI ($163mm), #2) Gateway ($81mm, a sizeable growth spurt, getting absolutely everyone’s attention, especially #1 & #3), #3) Dell ($76mm), #4) Zenith ($40mm, still hanging in there, but soon to be absorbed in the “king of second tier”, Packard Bell), #5) Compaq ($38mm, keep in miond they also sell on other people’s Schedules), #6)I-Net ($26mm), #7) Toshiba ($20mm), #8) Zeos (who remembers Zeos!?, $20mm), #9) Westwood ($18mm, and that’s lots of HP printers), #10) NEC (?!?, $17mm, the soon-to-be other factor in the Packard Bell equation) 1996 Top 10: #1) GTSI ($194mm), #2 Gateway (191mm, only 3mm off pace for the big upset, almost a TKO), #3) Dell ($135mm), #4) AmeriData ($67mm), #5) Micron (second year on Schedule & up 193%, $59mm), #6) BTG ($57mm, and Dr Bersoff is thinking, “Commodites are no fun!”), #7) Pulsar ($51mm), #8) Toshiba ($50mm), #9) Compaq ($33mm), #10) Electronic Systems of Richmond ($26mm) 1997 Top 10: #1) Dell (really tired of looking at Gateway’s backside, $270mm; a first round KO of both GTSI & Gateway), #2) Gateway (yes, they passed GTSI, but not fast enough to take #1, $234mm), #3) GTSI ($200mm, out of the top spot for the first time ever, but still in the money), #4) Micron (still growing fast in government, $119mm), #5) Pulsar (Pulsar!, $53mm), #6)GE Capital IT Solutions Federal Systems (or GEE-SIT-FIZZ, #6 in sales but #1 with long names, $51mm), #7) Compaq ($48mm, still doing lots on other people’s Schedules, too), #8) Toshiba ($30mm; you shouldn’t have let Jan go!), #9) Wang/I-Net ($29mm), #10) DLT Solutions (almost a boutique, as they represent only 4 product lines, but they do it ‘Oh So Well’, $28mm). (BTG is off the “Top Ten” list and Dr B is thinking, “I need a buyer for this commodity thing, fast!”) Yes, I know I’m missing 1992, and I’ll post it if I ever find it, again. If you’ve been to my office (and few live to tell of the experience), you’d understand. The rules changed starting in 1993, with Al Gore’s “Report of the National Performance Review” (NPR), then FASA, FARA, and the rest of the acronym soup that allowed GSA (and NIH and others) to re-vamp the way the Feds buy just about everything. Sayonara, Mr Brooks. Much has been written about the growth of the GSA Schedule in the past four years (averaging about 35% per year growth). But without Dell, Gateway and Micron, there has been no discernable growth. GTSI, for instance, sells through several other contracts and the open market. And though Compaq seems to have dropped from the top 5, they have several channel partners selling Compaqs on their Schedules, plus several other vehicles of their own. The real reason (as I see it) for Dell’s dominance is that of the new group at the top, they not only produce a top notch product, but they are by far the best marketing organization of the pack. Dell is the only true integrated marketer (see “Driving Brand Value” by Duncan & Moriarty, and “Integrated Marketing Communications” by Schultz, et al) in this group, using the web (their site is great and makes mucho bucks, or MB in government-speak), space, mail, radio (remember the spots when they moved to the #1 PC used in government?), and all other venues (including Mr Dell’s speaking engagements, where he is open, articulate, friendly and informative, without any taint of arrogance, like another IT presenter I could mention) to make that sideways “E” one of the most recognizable brands in the world. And they will continue to kick butt (KB) in this arena until other firms realize that marketing is not a subset of sales. Resellers especially must realize that in order to stay viable, they cannot wait for manna from heaven (MDF or co-op money) to position themselves proactively. And there is another new factor: several catalog firms (big, talented direct marketers) have entered the GSA arena, CDW, MicroWarehouse and others. My advice would have been to position themselves as the “open market alternative”, but who asked? But CDW and MicroWarehouse are both top-notch business-to-business (B-to-B) direct marketers, and may become serious players. The differences between B-to-B and B-to-G(overnment) are significant, and many catalogs don’t see the light of day after arriving at certain Federal loading docks. We’ll wait and see. But MicroWarehouse did $5mm in FY 1998, and CDW pulled a mere $300m, according to my sources. And let’s not forget the CC factor: government small purchase credit card growth has surpassed the wildest of dreams, and by the end of this FY, we predict $8 billion+ on 17mm transactions (see “Lessons Learned from FY 1998”). Obviously much of this activity is going for non-Schedule purchasing. Exciting stuff, eh? Copyright 1998, Amtower & Company