RSSEnd of an era: Gateway stops selling PCs directly to customers
By Michael Hatamoto | Published July 28, 2008, 2:57 PM
Computer maker Gateway has moved entirely to an indirect sales model in which it will stop selling PCs online through its own Web site, only offering PCs through retail channels.
After being founded in 1985, Gateway pioneered direct-to-customer computer sales, and enjoyed big success until the dot-com era began to erode. It quickly lost ground to competitors like Dell and HP. The Gateway brand, which is now a subsidiary of Acer, launched its own stores in the late 1990s and early 2000s, but the retail channel was not receptive of the stores.
The combination of making sales through its own Web site and retail partners was made after Gateway shut down its retail stores. Even without the benefit of stores, Gateway was extremely successful selling products through its Web site and phone service directly to consumers.
But selling products directly to consumers has become less popular in the computer industry, although Dell and Apple are two examples of exceptions. Apple, however, has seen sales surge after launching its own retail outlets.
Considering Acer's reliance on using retail partners to sell its PCs, this announcement was long expected and not too surprising. Acer uses an indirect sales model to sell all of its products across the world, and said its strategy has been "successful."
Gateway's sales shift away from direct sales has led to staff cuts that are taking place in small numbers after internal audits and evaluations of each department.
"Although you won't be able to purchase from us directly, Gateway.com is still your number one resource for information on the latest Gateway products, purchase methods and locations, along with support for previous purchases," the company said last week.
Consumers had their last chance to purchase Gateway products directly through Gateway's Web site on Saturday, with a quick look confirming that the 1-800-GATEWAY and online store have been removed. After viewing a certain PC or notebook, the bottom of each product's column has an "Available at" section that lists where consumers can make their purchase.
Gateway will feature its products at stores including Best Buy, Fry's, Circuit City, CompUSA, Cosco, OfficeMax, Office Depot, Tiger Direct, newegg and Wal-Mart.
I've bought 4 Gateways since 1998. I couldn't have been more satisfied with the first 3, including support. But for whatever reason, my current purchase last year with it's support issues and more importantly, no customer loyalty will probably cause me too look in a different direction when I purchase my next computer. Gateway, wanting me to pay for a downgrade to Windows XP also was factored into my change of heart though I now prefer Vista.
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|What? Are you kidding me? A company that is actually dumping the "low-cost, direct-to-consumer" simplified distribution model that "cuts out the middle-man to save you money" to go with a more expensive, more complex, more intricate indirect model that uses a (God forbid!) reseller channel? How can this possibly be? What will happen next? Cats will lay down with dogs?
This is actually a fascinating study in modern sales, marketing and merchandising dynamics in the tech industry today I think. There is a lot to be learned here for many of Gateway's competition if they peel back the onion and look at the driving forces that led up to this move.
Reminds me of how Dell (and quite a few other high profile companies) had to scrape all the egg off of their face a while back when it was forced to bring back all of the call center operations that it outsources over to India because they got far too many complaints from their corporate customers that wouldn't tolerate the poor service and threatened to dump Dell as their supplier.
Once yet again, "conventional wisdom" in business is not only proven wrong, it is slapped in the face publicly. You just gotta love that. I am sure this will make a VERY interesting case study in all of the nation's business schools going forward from here on now as well. I just love it when the so called "industry experts" are proven wrong like this in such a big way, for the entire business world to see.
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|exept for people who live in the boonies and a retail store is to far away and fuel is to high, they will buy something else.... i know i am one of them.
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|""Although you won't be able to purchase from us directly, Gateway.com is still your number one resource for information on the latest Gateway products, purchase methods and locations, along with support for previous purchases," the company said last week."
LOL!
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|For DELL and to a lesser extend, Apple, it makes sense to sell online as potential buyers are able to customize their systems.
It's for that reason that buying a DELL at Wal*Mart doesn't work out too well.
Gateway had some nice computers that were -sometimes- competitive with DELL (some of the higher end laptops were). I don't see Gateway's s*** as being a positive thing ... I actually don't know that Gateway has a good name in the marketplace... they'd be better rebranding as they are changing market strategy.
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|You make it sound like these people actually give custom machines. Well....they don't.
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|Isn't Gateway the brand that had the store where all they did was order the PC online for you? I remember one brand doing that.
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|I had one of my earlier computers repaired at their store. There was a nice showroom but I believe if you bought one from the store they were actually shipped from South Dakota. In fact, if the computer couldn't be repaired in the store, it would be shipped back to South Dakota for repair.
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|Great that Gateways are going to be at Walmart!! Gateways have been and will continue to be my choice for computers. Franki
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|Gateway - would probably never buy
Walmart - i hate that place
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|Well, I think you guys have pretty much covered the spectrum here...
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|lol
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|sorry to hear that...
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|Don't be so quick to judge. I have actually heard that Gateway has stepped up their quality quite a bit. All of the people I have talked to have been happy with their newer models. Besides didn't Acer buy them out?
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|I'm trying not to be judgmental, it's just that if you want a computer worth having...build one.
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|My niece got a Gateway notebook a few months ago and I gotta say, it's pretty nice (all my computers are Apple).
The only problems have been from Vista!
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|Yeah, try building a laptop. I agree though for a high-end or gaming desktop, but for a low-end desktop you'll never match Dell's price (especially refurb Dells), unless you steal Windows.
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|I'm not sure what Windows has to do with anything since there are plenty of free os's available.
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|>toolie troll alert!
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|Couldn't possibly be the responsibility of Gateway who passed along a system to you that is either poorly speced for Vista or has lousy drivers. Then again, you could have done some research on the machine before buying.
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