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Revenge of the Clone

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The firm's rapid growth owes something both to Varaklic's skill on the sales floor—"He's always been the best salesman here," says a colleague—and his adroitness in supplier negotiations. MDG is now the biggest Canadian account for both Intel and Microsoft. These affiliations are a point of pride for MDG, and the brands under the hood are hammered home in its ads.

Still, walking into a company outlet can be underwhelming. There's none of the arcade atmosphere of the standard electronics emporium. Few units are on display; instead, each salesperson has a desk to meet with customers about tailoring systems to their needs. The idea, Varaklic says, is to foster personal contact.

The emphasis isn't surprising, given that local assemblers' biggest impact on the computer industry was in allowing consumers to choose their components. Dell adopted this approach when it started selling on-line. Retailers such as Future Shop and Staples eventually offered custom configuring too.

But the nature of the game has changed. "Initially, Canadian-assembled PCs were sold solely on price," says Michelle Warren, an analyst at Evans Research. "Ten years ago, you could buy a locally assembled system for substantial savings. Now, all the prices are in line, so it's really the service and availability—the more operational issues—that are advantageous."

It's in the realm of service—"post-sales support" in industry parlance—that MDG shines: For the past seven years, the company has come first in a "Consumers' Choice" survey conducted by the research firm Market Facts Canada. Varaklic says most of his competitors back away from customer support, even though it's proved itself to Varaklic as "a way of building loyalty." He says that sales to repeat MDG customers outnumber referrals by 2 to 1.

Recognizing that many people do like to touch and physically appraise a computer before deciding whether to buy, Dell opened seven kiosks in Canada and dozens across the U.S., but it's still shying away from opening actual stores. Were it to go head-to-head with MDG on that front, some patriotic marketing would likely emerge from the Canadian side. Even the full-page ads MDG ran in major newspapers a few years ago featured sell lines like "Buy computers your neighbours build" and "Our country is Canada/Our home is Toronto." Says Varaklic: "We are Canadian-owned, we are the biggest Canadian brand, and we let people know that."

MDG got an instant hit of Canadian cool when it teamed up with Victoria-raised NBA star Steve Nash last summer. The Phoenix Suns' all-star point guard is featured in a series of print, radio and television ads—a coup for MDG, since Nash does little promotional work.

"We pointed out [to Nash's agent] the similarities between Steve Nash as a brand and MDG," says Minic. "We are both Canadian, no-nonsense, and all about quality and substance. Steve Nash is considered an overachiever. He is 6 foot 3 and a star player in the NBA. He surprises people each and every day with his talent, and we hope that's what he sees in us."

Given the relatively flat growth in the PC market, dropping prices and increased competition, MDG isn't resting courtside. It has made a push into the education, government and, above all, corporate markets—the latter, after all, accounts for 65% of computer sales. "MDG is expected to continue its transition into the corporate markets, especially now that it has the advantage of a strong brand name, coupled with on-line shopping, direct TV sales and multiple retail locations," says Michelle Warren.

A good thing, since the computer market will likely never relive the boom years of the '80s and '90s. The pace of upgrading is no longer as frenetic. "For home office workers, those working on spreadsheets, word processing, e-mails and general internet surfing, computers that are two, three or more years old are more than up to the task," says Robert Franner, editor of Marketnews, a publication for the consumer electronics and computer industry. "That's what most people used to use PCs for, office work, and there's little reason for them to upgrade."

On the other hand, computers are increasingly used for entertainment, where power demands are prodigious. That's why in January, MDG launched a powerful desktop series dedicated to giving customers "more power to play."

Whether the growth comes from work or play, Varaklic is sanguine about his company's prospects: "How many people are using computers today? More than ever. And how many are going to be using them in the future? Again, it's going to be more than ever," he says, without a hint of doubt. "The bar is going to be pushed up all the time."

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