Dell vs Gateway Comparative Analysis Term Paper

Excerpt from Term Paper :

Dell vs. Gateway

The personal; computer industry has been transformed over the past few years by several pioneers in the computer industry. Among those who are at the forefront of such changes are Dell and Gateway. Their user-friendly individualistic format of marketing often leads the customer to believe that their services are indispensable for the consumer. They both take previously unknown technological terms and offer them to the consumer in a relaxed format, so the consumer may understand them better and feel more confident making a purchase that details the need of their individual PC.

Gateway Computer additionally, was the main leader in building individual home and office computers for each consumer based on what the consumer reported its use to be and was first to offer a financing plan that included an open ended policy which allowed the consumer to grow with the technology, trading up in the same finance package, as soon as technology developed that made their initial system "obsolete." According to Schwartz, "The fastest computer that we make today will be about as powerful as the slowest computer we make in 18 months." Adds Gateway's Rick Schwartz, a senior product manager," (Dolinar, 2004, Dell soon followed suit with a marketing plan that included emphasis on the specific needs of the consumer, in a friendly format, with reportedly 24-hour tech support and service.

Company Backgrounds

Both Companies demonstrate a desire to meet the individual customers needs with reduced prices and direct sales, while still developing company storefronts and marketing their products through other well-known high volume retailers. Yet, the main marketing emphasis for both has within the last 5-10 years direct ordering of products by users online at company sponsored websites. This work will analyze the overall performance of each company through comparisons of their differences and similarities. The individual websites will be analyzed for consumer friendliness and marketing draw as well as ease of use and availability of product. "Dell remains the #1 direct-sale computer vendor and compete with Hewlett- Packard for the world wide PC title." (Hoover's online, 2004, website) The company boasts an 2004 annual sales of 41,444 million with a an impressive 1 year sales growth of 17.1% and 2,645 million in net income for 2004 with a 24.6% 1 year net income growth . In a challenging economy these statistics are impressive. ("Dell Fact Sheet" Hoover's online, 2004, website)

We design built, and customize products and services to satisfy a range of customer requirements. From the server, storage and professional needs of the largest global corporations, to those consumers at home. We do business directly with customers, one ant a time, and we believe we do it better than anyone on the planet. ("Dell Company Background," 2004, Dell website)

Dell has a history that extends into the history of PC development and thy were pioneers in individual PC sales. Dell has it headquarters in Round Rock Texas, and claims to be a premier provider of products and services for customers worldwide. Information-technology is there new focus and the customer base has grown with the development of new products, including PC, networking, web technology, storage and also home entertainment.

Dell's climb to market leadership is the result of a persistent focus on delivering the best possible customer experience by directly selling standards-based computing products and services ... The company employs approximately 53,000 team members around the globe. ("Dell Background" 2004 Dell Company Website)

The foundational business and marketing concept of the company is steeped in the idea of direct marketing. Sales are made directly to the individual, bypassing the cost of the retail middle man, and both keeping the company abreast of current customer needs in a swiftly changing market and also reducing cost to the consumer.

Dell was founded in 1984 by Michael Dell, the computer industry's longest-tenured chief executive officer, on a simple concept: that by selling computer systems directly to customers, Dell could best understand their needs and efficiently provide the most effective computing solutions to meet those needs. This direct business model eliminates retailers that add unnecessary time and cost, or can diminish Dell's understanding of customer expectations. The direct model allows the company to build every system to order and offer customers powerful, richly-configured systems at competitive prices. Dell also introduces the latest relevant technology much more quickly than companies with slow-moving, indirect distribution channels, turning over inventory every four days on average. ("Dell Background" 2004 Dell Company Website)

Comparatively the Gateway company has built its reputation on direct market sales with the additional creation of a financing policy that allowed customers to seek financing directly from the producer, rather than through a third party, in a sense an extension of the direct marketing concepts of Gateway.

Founded in 1985 in an Iowa farmhouse, Gateway has grown into one of America's best known brands with millions of satisfied customers. Starting with a $10,000 loan guaranteed by his grandmother, a rented computer and a three-page business plan, Ted Waitt turned Gateway into a revolutionary company whose innovations helped shape the technology industry. The company ... received national acclaim in 1991 when it introduced its distinctive cow-spotted boxes, a tribute to its farm heritage ... ("Gateway Computers/Company Background" 2004, Gateway website)

The marketing technique of the company has been that the main premises of customer service have remained the same despite evolving technology and customer needs. The company has been relatively successful at developing and then filling a basic need for customer support with real world language and treatment.

But the company's basic principles remain the same. Gateway's early value proposition is similar to that of today and an outgrowth of Ted's own predisposition to plain talk and fair dealing. It is based on offering products directly to customers, providing them with the best value for their money and unparalleled service and support. Gateway has always been devoted to treating customers with respect and decency, and it consistently ranks among the industry's top companies in customer loyalty, an accomplishment the company and its people prize highly. ("Gateway Computers/Company Background" 2004, Gateway website)

Gateway's financials have been challenged in the last few years as announcements of the removal of many of its brick and mortar store locations from the market. The change has come as a result of the increased customer confidence with sight unseen purchasing online by countless technology seeking customers. Yet the company still has an impressive growth rate.

2003 Sales (mil.)


1-Year Sales Growth


2003 Net Income (mil.)


2003 Employees


("Gateway" Hoover's Online, 2004, website)

Comparing Marketing Strategies

Product Strategies

Gateway claims pioneer status that can be largely backed up by their many firsts, not withstanding their cow printed boxes. The company also still supports it financing system that includes the ability of a customer to trade up for computer and technology products that are more current than those originally purchased by the customer. This drives outstanding results in customer loyalty and return purchasing.

Gateway, since its earliest days, has pioneered numerous industry trends and practices. It was the first PC company to offer systems with color monitors as standard, the first to offer a standard three-year warranty and the first to commercially explore convergence of the PC and television. It was one of the nation's early "bricks and clicks" retailers, and it was among the first direct retailers to sell its own branded consumer electronics with the launch of the highly successful Gateway® Plasma TV. ("Gateway Computers/Company Background" 2004, Gateway website)

Gateway continues to be at the forefront of direct customer sales and the marketing strategy has remained constant and enduring. The product development has broadened significantly in the last few years with expansions into much more than PC sales.

Gateway's evolution has taken it from a PC maker to a full-service technology provider with a wide range of its own products and services, such as thin TVs, digital cameras, camcorders and systems and networking products. ("Gateway Computers/Company Background" 2004, Gateway website)

Dell has also done a more significant expansion of its already strong base in commercial applications and has focused it growth not only on the individual direct sales market but the industry focus upon service expansion, offering both hardware and support at a unprecedented rate.

In addition to a full line of desktop and notebook PCs designed for consumers, dell offers, network servers, workstations, storage systems, and Ethernet switchers for enterprise customers. The company also sells handheld computers and it markets third-party software and peripherals. Dell's growing service unit provides system integration, support and training. (Hoover's online, 2004, website)

Both companies have expanded their marketing mix over the last few years, with Gateway expanding into Dells territory with small commercial applications while Dell continues to focus on larger company application and in addition the service end of the market.

Pricing Strategies

Gateway and Dell pricing strategies are very similar, in that they are both strong foundationally in the direct market end of the industry. Though both offer product to retailers…

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