Gateway: Moving Beyond the Box
Gateway.com
Advantages:
The fastest growing channel accounted for 10% of sales
Cost is half of other channel’s
Goal:
go after additional discounting aggressively
move people out of stores and phones and onto our website
be successful as Dell in terms of putting its mentality and focus on the Web
Gateway Country Stores
Advantages:
Projected customers will increase by 50% this year
Gives differentiation from that of Dell because the kind of customers they attract are dissimilar
Goal:
To attract the 75% of people are still buying in retail outlets
Product Strategy:
To augment Gateway’s PC hardware sales, they implemented the hexagon strategy with five different revenue streams: software and peripherals; service and training;** Internet access; portal/content; and financing.*
*in the YourWare Program
**in the Country Stores
Advantage:
This strategy is consistent with the company’s philosophy.
Disadvantage:
However, this strategy is radical since 90% of its revenue comes from PC systems orders and to transform into full-scale solutions provider would be a challenge.
Other company applying the pieces of hexagon strategy did not succeed.
Goal:
To leverage the 3 distribution channels in order to market these applications more effectively
Gateway’s Goal:
To be regarded as PC hardware and solutions company and generate 40% profits from its non-PC revenue by 2001.
Company Background:
In 1985, Ted Waitt made $3,000 computer purchase out of a 20-minute call. This telephone retail eliminated real distribution costs and markups and the finished goods inventory and showrooms costs.
A company that offered built-to-order computers at a bargain, that is, high-end quality for low-end prices.
In 1991 Inc. Magazine named Gateway 2000 the fastest-growing private company in the nation, with $626 million in annual sales and 1,300 employees because of their great service and