Gateway maps 'beyond the box' growth

The direct PC vendor wants to generate a larger slice of its profits from non-PC products and services. Gateway has dubbed the strategy its "beyond the box" initiative.

The plan includes a partnership with Sun Microsystems, whose sales staff will recommend Gateway PCs to Sun customers looking for Windows-based computers. In return, Gateway in April will pre-install computers it sells through Sun with the Sun Portal Pack, Sun's web-based desktop application software.

Gateway announced two other partnerships yesterday -- with office equipment company OfficeMax and business software maker eSoft -- that are also geared towards broadening Gateway's distribution channels. As part of the deals, Gateway will invest a total of $US75 million in OfficeMax and eSoft, the PC maker said.

In a market where PC prices have declined steeply in recent years, Gateway and its rivals have been working hard to diversify their revenue base. On Tuesday, Dell announced plans to offer a variety of web hosting services under a partnership with Interliant of New York.

In February of last year, Gateway became the first PC maker to bundle its own internet access service with its PCs -- although Gateway has since largely handed control of that service over to America Online (AOL). Gateway then went on to launch an online store where the company sells peripherals and software. The PC vendor also makes money by offering computer training and other services to consumers and small businesses, said Gateway spokesman John Spelich.

"We view the PC as a central device, but it's only the beginning of a lifelong relationship with the customer which carries through to the peripherals, the software and other services," Spelich said. "We think this will be the business model of the future."

To become a $US30 billion company in 2004, Gateway will need to speed up its rate of growth substantially. For its 1999 fiscal year, Gateway reported revenue of $8.6 billion, an increase of 16 per cent over fiscal 1998. As an early target in its five-year plan, Gateway said it hopes to boost the portion of income the company derives from non-PC products and services to 40 per cent in the current fiscal year -- twice the level in fiscal 1999 and 10 per cent higher than the vendor's previously announced target for fiscal 2000, the company said.

Jeff Weitzen, Gateway's president and CEO, said the new strategy will help the company reach more customers than it ever has before.

Wall Street reacted favourably to yesterday's announcement. Gateway's shares on the New York Stock Exchange were selling for $67.19 in late afternoon trading, up $10 from the day before.

In the deal with OfficeMax, Gateway plans to set up a Gateway store within the retail computer department of more than 1000 of OfficeMax's stores in the US over the next 12 months. Gateway will invest $50 million in OfficeMax convertible preferred stock and carry a hot link to the OfficeMax.com online store on all PCs sold to small and medium businesses, the company said.

The partnership with eSoft will combine that company's software and services with Gateway PCs and servers to offer a range of online services to smaller businesses, including firewall protection and web hosting. The move should make it easier for smaller firms to take their businesses online, Gateway said. Gateway has committed to invest $25 million in eSoft, and will work with the company to develop new software and services.http://www.gateway.com

Join the newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection
Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

James Niccolai

PC World
Show Comments

Cool Tech

Breitling Superocean Heritage Chronographe 44

Learn more >

SanDisk MicroSDXC™ for Nintendo® Switch™

Learn more >

Toys for Boys

Family Friendly

Panasonic 4K UHD Blu-Ray Player and Full HD Recorder with Netflix - UBT1GL-K

Learn more >

Stocking Stuffer

Razer DeathAdder Expert Ergonomic Gaming Mouse

Learn more >

Christmas Gift Guide

Click for more ›

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Walid Mikhael

Brother QL-820NWB Professional Label Printer

It’s easy to set up, it’s compact and quiet when printing and to top if off, the print quality is excellent. This is hands down the best printer I’ve used for printing labels.

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Ratchada Dunn

Sharp PN-40TC1 Huddle Board

The Huddle Board’s built in program; Sharp Touch Viewing software allows us to easily manipulate and edit our documents (jpegs and PDFs) all at the same time on the dashboard.

George Khoury

Sharp PN-40TC1 Huddle Board

The biggest perks for me would be that it comes with easy to use and comprehensive programs that make the collaboration process a whole lot more intuitive and organic

Featured Content

Product Launch Showcase

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?