Good afternoon ladies and gentlemen. Pragmatic Technologies in May this year launched Nigeria first Branded Notebook under our Brand name PRAGMATIC. This was also the first formal declaration of Nigeria’s first Branded computer.
It is therefore with deserved recognition that Pragmatic Technologies has been invited to share our experience in computer hardware assembly in Nigeria.
WHAT IS COMPUTER HARDWARE ASSEMBLY?
What really is Computer Hardware Assembly? Computer Hardware Assembly is the bringing together of discrete computer components to get a complete computer system. Computer Assembly is as old as the history of the personal computer itself. A lot of people have the misconception that a computer is made 100% by a single company – the answer to this is NO! Rather, what we have are component makers who have specialized in the manufacture of specific components worldwide. Examples such as Gigabyte for Motherboards, Intel and AMD for Microprocessors, Seagate and Fujitsu for Hard disks abound. Overtime, these component makers have developed specialty in their products and have achieved production and cost efficiency.
Based on these factors, there is no point for trying to re-invent the wheel by others. For any entity to go into component manufacture, the venture must be profitable and be able to stand up to established producers in terms of cost and quality. For instance only two companies in the world make commercial Air Jets – Boeing and Airbus – based in the USA and Europe. The two have dominated the industry and have a stranglehold on it. It is from them that advanced countries such as Japan, Germany e.t.c source their jets despite the fact that these countries have the technological capability to build their own planes.
WHY LOCAL HARDWARE ASSEMBLY?
Importation of a finished good, or in this case an already assembled computer from outside the country has many associated costs with it. This includes foreign labour, which may account for 10 to 20% of the total costs. With local assembly, foreign labour and distribution costs are eliminated. The foreign labour that is replaced with local labour comes at a fraction of the former. Elimination of foreign labour also means local job creation.
Also the local duties paid on computer components rather than assembled systems are reduced since a finished product has a higher total overall cost.
Computer components rather than finished goods also reduce shipping volume that in turn reduces freight charges.
Rather than have pre-determined assembled computer configurations, a computer assembler can receive first a customer order before assembly. This ensures efficient stock management and component deployment. Generally, local computer assembly provides the lowest cost for systems – the benefit which is transferred to local buyers.
CLONES
A visit to Computer Village in Otigba, Ikeja, Lagos, Nigeria reveals a flurry of activities where computers are assembled on a daily basis. Such assembled systems are referred to as “CLONES” or UNBRANDED Systems. Basically, an Otigba player gets components from any component seller, assembles them together, and gets a working computer. The assembly process is highly informal, there are no standards kept, no record of the components used for the finished product, no serialization or record keeping of the product – the product is faceless. Probably the software installed on the unit is pirated. Such systems come at the lowest costs because “corners are cut”. Such builders act purely with a trade mentality. More often than not, there is no warranty or after sales customer relationship. These types of market always exist worldwide. Infact, individuals can assemble their own personal computers with little or no knowledge.
BRANDED PRODUCT
A branded product compared to a clone is a product assembled with standards and with the manufacturers’ “signature” on it. The signature is the brand name of the product. For example our notebook is branded under our label “PRAGMATIC”.
A brand name identifies a product and connotes different things to different users. Such include reliability, quality, reputation and other qualitative attributes. Using the Pragmatic Notebook as an example, each product is assembled using standardized components, taken through a quality control check and serialized.
By serialization – a history of the configuration of the product is kept which enables the product to be traced and given effective after sales service after purchase. A brand name effectively associates a product with its manufacturer.
ASSEMBLY INFRASTRUCTURE
Recently, different companies have tried to mystify local computer assembly or manufacture. The impression is given that one needs a skyscraper or warehouse to assemble computers. This is far from the truth! A computer can be successfully assembled in a bedroom! It involves more of human effort than any other process. Apple and Dell computers, both leading brands today, started from the “GARAGE” concept to their present large production capacity. Rather than the traditional Brick and mortar Infrastructure of most business startups – these acorns grew to the proverbial Oak, due to an unyielding innovative entrepreneurial spirit and being customer oriented. The same scenario can unfold in Nigeria.
The Pragmatic Notebook has lots of similarities with these two companies in its birth. Also, the success of a “Garage Startup” depends also on the short or long term views of its promoters. Hardware assembly and branding is a marathon race that tests the stamina and resilience of the startup company. Initially there are no returns due to heavy investment on infrastructure and marketing costs, but the serious players, should know this and prepare for a long-term product growth and development. Developing a brand successfully will take a minimum of 2 years.
PREJUDICES OF THE LOCAL MARKET
“I have not heard of this product before. Is it reliable? Who are the current users? Only foreign brands will do for me.” The foregoing are just some of the examples we experience on a daily basis in projecting and marketing the “PRAGMATIC NOTEBOOK”. The questions are logical and in order for a discerning buyer. To overcome such prejudices, we have found the following useful:
- Providing products of the highest standards and quality.
- Truthfulness
- Cost effectiveness and Affordability
- Purchase Assurance guarantee
- After sales support
- Motivation
- National Patriotism
It is important that products are of the highest standards and quality because nothing can damage a brand name more than inferiority or unreliability effect and perception. A good product will always sell itself. In developing new products, it is important that comprehensive tests especially with regards to our local environment are carried out before introduction to the public. Our products are tested for a minimum of six months before going public.
Buyers appreciate the truth – tell them exactly what you are offering without glossing over anything. We tell our customers the concept behind our product, origin, our input, and e.t.c. When you speak the truth; people trust you and your product.
If you are asking a local buyer to patronize your products rather than a foreign brand or competing local brand – there has to be some consideration of some sort. There has to be a cost advantage over the competing brand. This way a buyer can rationalize choosing your product. In this instance, we are referring to products of same configuration and quality but different price offerings.
It is important to assure customers that their investment in your products is safe. This removes any doubt or suspicion in your products. For the “PRAGMATIC” notebook, we provide a 30-day money back guarantee and a 3-year warranty. Currently, we are the only IT Company offering a 30-day money back guarantee in Nigeria.
It is always good to motivate potential buyers. Providing a service or a product that complements consumers’ primary purchase free of charge motivates a lot. For instance for the Pragmatic Notebook, we give free trade vouchers, Internet service and mobile scanners.
Lastly, we invoke national patriotism - people will be surprised at the number of buyers we have secured that could conveniently buy foreign brands but were convinced that buying a local product pays Nigerians in the long term. Charity begins at home.
Role of Government in Local Computer Manufacture
Generally, Government should provide an enabling environment for local production of computers so as to encourage local initiatives. As a matter of policy, government should enact the following:
- Reduction of taxes, duties and levies for components used for assembly.
- Increase of duties for imported finished goods so as to discourage foreign product dumping.
- Government should acquire only locally assembled products in its establishments.
- Provision of syndicated financial and loan schemes to assist local companies involved in computer assembly.
- Long term plan of being able to produce components required for assembly.
The Future
The whole aim of local computer assembly is to make computers more affordable to the public, which by so doing will increase IT literacy, develop our local economy and gradually place us on the path of being a self-reliant country. While government must play a central role in creating an enabling environment, market dynamics of local producers will ensure more affordable computer systems. There will be more players and competition will further bring down prices. Since government is the biggest spender in any economy, patronization of locally produced computers by government parastatals should operate in an open and transparent manner and on merit. All eligible manufacturers should be given equal chance in all government supply and bid processes.
Finally, I call on all Nigerians to support and patronize reputable locally produced computers as they are more affordable than foreign brands and provide the same level of quality. By so doing we are helping to develop our local economy, create job opportunities, conserve foreign exchange and in the long term contributing towards being a self-reliant country.
Thank you for the honor given to address this gathering.
God bless you all.
Biodun Marquis
CEO, Pragmatic Technologies Ltd.
Speech delivered on MITV ICT Leadership Forum at Golden Gate Restaurant on 15/12/2001.
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