Omatek Is Dying, But It Shouldn’t Have Been In PC Business

Another tragedy has just befallen the Nigerian tech community.

It is the likely death of Omatek Computers. The company is currently fighting a winding up law suit files against it by First Bank.

The plaintiff wants the court to fold up Omatek for its inability to pay back a loan facility it secured between 2014 and 2015. With the company’s admittance of insolvency due to harsh economic conditions it is hard for anyone to imagine if it can survive the onslaught of its lender.

Rewinding time back to late 90s, Omatek and Zinox Computers were both promising computer assemblers. The dream of a Nigerian made laptop and desktop was mesmerizing and inspiring for any Nigerian who is trying to place Nigeria in the global innovation pie.

But the excitement was short-lived. Omatek and Zinox suffered from typical challenges facing Nigerian tech startups. Absence of leverage and policy support made their products play ‘zero fiddle’ in the market. The influx of cheaper HP and PCs from China and Thailand put the last nail in their coffin. Stanley Ekeh, CEO of Zinox has just recently divested into eCommerce with the name Yudala. Florence Seriki of Omatek might have perhaps held on to her gut that there is light at the end of the tunnel.

Well it turns out she might have to look into another tunnel.

But Omatek and Zinox could have done some things differently.

If producing in Nigeria makes your CAPEX and OPEX go through the roof, why stick to a loss-prone strategy? After all, Apple does not manufacturer in the US. Foxconn would have produced for them and they would have just stick with marketing and distribution.

One other mistake that was glaring was their fixation with churning out PC and accessories. The world was moving away from mobile hardware into mobile, software, apps and the cloud. If not for the political hullabaloo over TSA SystemSpecs made more than all the revenue Omatek and Zinox made in their many years of doing business within three years.

Except things change fundamentally, Nigerian tech entrepreneurs have no business in hardware business. The costs are just too bogus and environment is too harsh for any profitable factory to survive in.

If Omatek survived this, the company should get out of hardware business. If they have good hands in software, the company would do better and manage cost better.

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