Consumer focus brings down Gateway

Both observers and players in the PC market have attributed Gateway's failure to maintain a broad market appeal as a major factor in the company closing its Australian doors Wednesday.

Logan Ringland, a senior PC analyst with IDC, said the company's focus worldwide has always been on the consumer side of the market. Although admitting this market segment had been a major area of growth over the past couple of years, it is no longer the case anymore. "You just can't really expect to be successful if you miss out on large businesses and the government sector," he said.

Compaq's marketing manager for its PC division Tony Ignatavicius supported Ringland's views on the consumer segment of the PC market. "When that becomes soft you will be impacted quite significantly," he said. IBM did not comment on the issue, saying it was policy not to comment on competitors.

Unlike Gateway, Dell has built its local business by addressing a "broader range of markets" said the company's communication manager, Rob Small. Of its sales, about 75 per cent are made in the corporate/government/education market and 25 per cent in the small-medium business and consumer market.

Figures by IDC has Compaq as the top PC vendor in Australia for the second quarter of this year with 15.8 per cent market share. Dell follows with 10.6 per cent. However, down the line was Gateway. According to IDC, it was ranked number 10 with 1.9 per cent of the market of the total PC market in Q2.

As for the current overall state of the PC market, Dataquest analyst Andy Woo said he expects it to remain "soft" until 2003. He said there will be some excitement brought about by the upcoming release of Windows XP and the uptake of the 2GHz chip. "But is that compelling enough? I don't think so."

On the chip front, both Intel and AMD say they won't be affected by today's decision. A spokesperson from AMD said AMD Australia did not supply Gateway Australia with processors. The spokesperson said AMD processors would have been purchased by Gateway outside Australia as part of their global OEM agreement with AMD. "As a result, the closure of Gateway's Australian operation will not impact AMD Australia's revenues."

Intel spokesperson Stephanie Silvester said the impact on Intel would be minimal. "We don't anticipate much impact to the overall Pentium 4 processor ramp up," she said. Silvester made reference to the company's launch event of its 2Ghz chip this week. At the event 12 major vendors were displaying their PCs fitted with the 2GHz chips. Gateway was not one of them.

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