Can Gateway Compete

By Mark Hachman  |  Posted 2003-08-12 Print this article Print

?"> While a retailers decision to supply its own branded products in competition with other third-party products is a relatively new concept in the electronics market, its old hat in other segments. Supermarkets like Safeway routinely sell cheaper "house brands," competing against names like Kelloggs, said NPD Intelect analyst Stephen Baker. However, the practice may become more common, as retailers discover they can ask the same Asian integrators that design products for consumer products to accept their own contracts as well. The practice is most common with such commodities as ink cartridges, paper, and sometimes even mice and keyboards, Baker said.
"Theres two reasons to do this: to extend your brand and to make your own money," Baker said.
Gateway is a branded integrator, he said, similar to Dell, of Round Rock, Texas. For the most part, both companies are a private label store, but both will also sell third party products that consumers might have traditionally visited a large electronics retailer like Staples or Best Buy to buy. "If youre going to use retail distribution, youre going to have to expect the retailer to compete with you," Baker said. "From the retailers perspective, the manufacturers all compete with retailers too. ... It cuts both ways. The new reality of distribution is that everybody is going to have to sell in the best way they can, wherever they can." The dichotomy between competitor and partner can create conflict, Baker noted. Gateways Williams said the company had had "good discussions with those suppliers" potentially affected by the move. For example, Gateway has sold Hewlett-Packard printers from its retail outlets. "Were promoting our own brands as best we can put, but sometimes we have to put customers needs ahead of own," Williams said. Gateway plans to offer a variety of products for sharing media throughout the home, including, potentially, personal video recorders and wireless networking equipment. The key, Williams said, was to provide a uniform "experience" through common hardware connections and user interfaces. "Instead of doing a whole bunch of launches over one day, well be rolling out these products through the coming months," Williams said.


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