Lessons to be learned from Gateway’s demise

Gateway Inc.’s failure in the New Zealand market had more to do with its U.S. parent company’s business plan than anything the local office did. However, there are lessons to be learned from the PC manufacturer’s closure, says research company International Data Corp. (IDC).

IDC analyst Darian Bird says Gateway “really ignored” the small to medium-sized enterprise (SME) market until only very recently.

The PC market as a whole in New Zealand is fairly robust, says Bird, who does not see any more multinationals pulling out or collapsing in the near future.

“The ones at risk are probably the smaller local assemblers who also don’t target businesses.” Gateway also had very little channel presence, says Bird.

“They basically had only the Warehouse Stationery chain and their direct sales online or on the phone.” Bird offers Compaq’s recent climb to number one in the home user market as an alternative model.

“First-time home users can’t buy online, obviously, but people are still shy about handing over that sort of money online. A strong channel presence has really helped Compaq in the last quarter.”

Both Dell and IBM have good results in the corporate, government and small and medium-sized enterprise (SME) sectors to balance their lesser rankings in the home user market, but Gateway didn’t have any real presence on that side of the ledger and that hurt them.

“They were running 10th overall which is a long way down from where PC Direct peaked at.” Gateway bought PC Direct in 1998 to use as its access to the New Zealand market.

Bird says the notebook market is also an area to watch.

“Notebooks are one segment that is growing quite quickly and companies like Toshiba and Compaq are offering more at the consumer or home user end of the market.”

Gateway did sell its Solo range of notebooks but Bird says it wasn’t something that was emphasized in Gateway’s line-up.

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