HP clinches five-year deal to supply Saudi with PCs

HP has won a lucrative contract with the Saudi government to provide up to 100,000 PCs a year for the next five years. The vendor last month signed a deal with the Communications & Information Technology Commission (CITC) to provide machines for its ‘PCs for homes’ initiative.

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By  Peter Branton Published  June 12, 2005

HP has won a lucrative contract with the Saudi government to provide up to 100,000 PCs a year for the next five years. The vendor last month signed a deal with the Communications & Information Technology Commission (CITC) to provide machines for its ‘PCs for homes’ initiative. The CITC has been working with private firms in Saudi Arabia for more than a year to get the scheme off the ground. The aim of the scheme is to make affordable PC ownership a reality for a wider section of the Saudi population, with one million PCs to be delivered over five years, and increase ICT awareness in the Kingdom. Through the scheme, people will be able to buy PCs on a cash basis, or they can pay in installments of US$25 a month for a period of three years via their fixed line telephone bill. HP’s winning of the deal was hardly a surprise, with the vendor widely expected to be so favoured. Speaking at an event in Dubai in March, Mohammad Ebrahim Al Swaiyel, governor of the CITC had said that PC makers which have already established assembly operations in the Kingdom would benefit (see IT Weekly, 2-8 April 2005). So far, HP is the only multinational vendor to have such an assembly plant already operational, although others are expected to launch shortly. Hazem Bazan, general manager of HP Middle East’s Personal Systems Group (PSG) confirmed that the local assembly plant had been a condition for HP to win the deal. “That’s where we have the advantage because we are already in place with this,” he said. The initial deal will see HP provide 100,000 PCs a year for the scheme, with a local assembler also providing PCs. Bazan said there was no exclusivity on the deal and that other vendors could be invited to participate by CITC. HP expects to begin delivering the first machines sometime in July or August. For HP, the size of the contract win is a validation of its strategy of launching the PC assembly plant, which has now been operational for over a year. Output should reach 100,000 machines some time this quarter, Bazan said, with the plant now able to produce 1,000 units a day. “We are hitting that with only one shift as well, so we could comfortably go up to 2,400 a day,” said Bazan. Currently the assembly plant provides 84% of HP’s Middle East assembly needs, he said. For now, the plant is only used to make desktops rather than notebooks, although HP is evaluating its options, Bazan said. “It [making notebooks] is definitely under discussion, but right now we haven’t hit full capacity and we would want to do that first before considering other options,” he claimed.

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