Gateway Computers Gives an Introduction About the Term Paper

  • Length: 5 pages
  • Subject: Business
  • Type: Term Paper
  • Paper: #77025414

Excerpt from Term Paper :

Gateway Computers gives an introduction about the company and outlines the main business strategies adopted by the company. This paper also describes the company's major business decisions and what contribution it has made to enhance the use of Information Technology among its consumers.

Gateway Computers

In its seventeen years of business, Gateway Inc. has made valuable name and place in the global market of computers. Ted Waitt, founder of the company initially conceived his corporation on an Iowa cattle farm. Seventeen years later its head quarters can be found outside San Diego, California. The company was primarily founded on the ingenious idea of selling computers straight to the consumers rather than through retailers and distributors. The main aim of the company was to make to profit via abating costs of computers to consumers through a direct sales approach. In the beginning, the company acquired success but eventually suffered as its business models failed to keep stride with modifying industrial and economic throb. Now, Gateway Industry is one of the leading industries to be using the brick and mortar model as part of their business strategy. Compared to other industries that relied on e-business strategy, Gateway Computer focused on the key areas where they mastered strength and developed from what they knew best. Till now, Gateway Inc. contest with companies such as Apple and Dell.

When Gateway Inc. was founded, computers were only starting to become popular in schools, businesses and homes.

Personal computers were fast becoming part of the American culture and the needs for and benefits of a personal computer no longer required explanation nor the assistance of more highly paid, presumably better trained sales people to help consumers make a purchase decision. Apple's costly distribution system and minimum pricing requirements for resellers began to wok against the company. Gateway capitalized on the changing American culture by providing consumers with a more cost-effective way to purchase personal computers (Robert Paul, Gateway And Apple: A Tale Of Two Companies).

Hence, it can be said that Gateway Inc. made ample profits by selling computers directly to the consumers.

In the beginning Gateway's stocks chart was very similar to that of Apple's stocks chart. In the late 1990s, Gateway's stocks began to move even higher. "Gateway's rise in fortune was directly tied to the release of Windows 95 and the climb to market dominance of Microsoft's ubiquitous desktop operating system" (Robert Paul, Gateway And Apple: A Tale Of Two Companies). Gateway computers when compared to Apple computers did remarkable business but could not match the strategies deployed by the Dell computers. "Dell's focus on efficiency outpaced Gateway's efforts to sell direct to consumers while maintaining a folksy marketing charm. Dell's revenue and profits grew at an accelerated rate compared to Gateway. Dell's stock price soared at a rate that seemed to defy the laws of gravity" (Robert Paul, Gateway And Apple: A Tale Of Two Companies).

During the mid 1980s, Gateway had started to open retail stores in suburban areas. The main strategy adopted by these stores was to furnish customers with direct help and solution. They also employed their direct to customer sales model.

Gateway's management also pursued a strategy called beyond the box in an effort to grow revenue and earnings by providing other services to businesses and consumers.

The so-called beyond the box strategy was an indication that management no longer saw hardware sales as the source for future earnings growth. Dell had bested Gateway on price and manufacturing efficiency, and Gateway was turning to services as a way to maintain growth and profitability (Robert Paul, Gateway And Apple: A Tale Of Two Companies).

In 2001, as a result of tough competition, Gateway Inc. faced a number of challenges. Ted Waitt instantly attempted to reduce the corporation's cost structure and commanded that Gateway was discarding the beyond the box model in order to pay attention to the company's endeavors on attaining profits from hardware sales. This decision of Mr. Waitt caught the market, analysts and investors by surprise. "The company had close to 300 gateway Country Stores staffed by people trained to push both hardware products and "beyond the box" services. At the time that story was written, Gateway's shares were trading at a value more than six times that of today" (Robert Paul, Gateway And Apple: A Tale Of Two Companies). Ted Waitt made remarkable decisions to save his company from further losses. He changed all of his old policies and adopted new ones.

Just three years ago, Waitt's one-third stake was worth $9 billion. Now, as the company weathers a bruising industry downturn and a nasty price war with Dell

Computer Corp., the value of his shares has dwindled to about $400 million. Worse,

Gateway's market cap is $1.3 billion -- and it has $1 billion in cash on hand (Arlene

Weintraub, News: Analysis & Commentary: Computers: Gateway: Picking

Fights It Just Might Lose).

In 2001, the company laid off around 5000 workers to cut costs. Arlene Weintraub in her article said,

Waitt is still waiting for Gateway's cows to come home with the cash, leaving him with a mere 5.6% of the U.S. market. To grow, he's making his case to prospective

Apple shoppers. The new ads feature an animated Gateway computer, the Profile 4, doing backflips over an iMac. It touts Gateway as the cheaper alternative, one that's in the PC world. The flat-screened Profile 4 resembles Apple's iMacs, but comes in some

400 cheaper. Analysts say the new Gateway doesn't have enough features to win over Apple loyalists, but it could lure the small niche of PC users contemplating buying

Macs (News: Analysis & Commentary: Computers: Gateway: Picking

Fights It Just Might Lose).

In the last five years, Gateway computers changed its policy and claimed if you can't beat them, buy them.

The PC maker buys rival eMachines in an effort to get its products into the big box electronics stores. Gateway only sells PCs over the Web and in its own retail stores.

The $235 million combination will also make Gateway the third largest PC maker worldwide, although it's still far behind the leaders, Dell and Hewlett Packard. And Gateway has lost money for the last three years due to pricing pressure from those

Rivals (Susie Paul, Nightly Business Report).

The company is now doing remarkably well and is the third largest Computer Company in the United States of America. It is also the fastest growing server manufacturer. With time, Gateway Inc. has grown to have key partnership with the market leaders, such as Intel, Hitachi, IBM, Novell and Motion Computing.

In order to come to the level that Gateway Inc. is now standing on, one needs to make smart decision. This is exactly what Tedd Weitt did. In an interview, Weitt said,

Our strategy really is to deliver solutions. The combination of the box where we know we have to continue to have aggressive hardware pricing, and we plan on doing that, but we have the capabilities to give them training. If they want it installed, they want it serviced, they want it supported, we can do that, and we can wrap it all in a financial wrapper to make it very affordable for our customers' sake (Susie Paul, Nightly

Business Report).

In order to cut down cost, Gateway had to level off 5000 of its employees. The arrearage for the leases on the Gateway Country Stores relied greatly on the company's books. In order to rejuvenate sales at its retail points, Gateway transferred inventory into the stores so that the shoppers would have the chance to buy hardware products on site, rather than order through the Internet or phone and wait for the delivery to take place. "Gateway's decision to open almost 300 Gateway Country Stores was a curious departure from the company's low cost approach to consumer sales" (Robert Paul, Gateway And Apple: A Tale Of Two Companies).

The contribution made by Gateway Computers to the world of information technology has been colossal. Gateway Inc. has provided solution, help and easy purchase to their customers. Their prices are reasonable and therefore affordable. Gateway Inc. has produced its state of the art designs in order to give a new look to the professional computing. Some of their products are as follows,

Disruptive, Leading-Edge Storage Technology.

First Tier-One Vendor to Market SATA JBOD.

Competitive Pricing, with Two Terabytes of RAID-Protected.

Storage for Less than $6,000.

Leader in Digital Cameras and Presentation Products.

High-performance, High-Availability Server, Networking and Storage Products.

High-capacity Storage Products Using SATA Technology.

1P, 2P and 4P Servers Available in Tower and Rack Form Factors.

Performance-Tested 1U, 2U and 4U Servers with no Legacy-Design Issues (Why Gateway?).

The major contribution of Gateway computers to the field of IT is that they have really boosted computer sales. The company is playing a major role in making computers easily accessible to its consumers. "Gateway Inc. is building the Information Marketplace. They are making an effort so that everyone could become…

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