Professional Segment Key, Inouye Says

By Jeffrey Burt  |  Posted 2005-06-20 Print this article Print

In the 15 months that wayne inouye has been CEO of Gateway Inc., he has remade the computer maker into a lean, financially stable company.

In the 15 months that wayne inouye has been CEO of Gateway Inc., he has remade the computer maker into a lean, financially stable company. The Irvine, Calif., companys strategy for its professional business will be a key to continuing that success, Inouye said in a recent interview with Senior Editor Jeffrey Burt. Read the full interview with Inouye at

What moves are you eyeing in the upcoming quarters to continue this profitability?

Our focus right now is the professional [business]. It comprises two-thirds of the PC business as we know it, and its largely controlled by one competitor, and that would be Dell [Inc.]. So were really focused on growing our market share. Its very low now. We feel that were building some momentum there.

Can you talk a bit about how you differentiate yourself from Dell and Hewlett-Packard [Co.] in the professional space?

There are basically four areas that you compete in, and generally you have to be at parity in three of the areas, and one you have to own, if you have any ambitions of winning in the marketplace. In our case, its about creating customer intimacy. Simply put, that means that customers have greater access to us based on a hierarchy we create within the company.

Industry observers say that, on the retail and consumer side, Gateway is in terrific shape. However, on the professional side, the company is lacking a strong, coherent message. Can you talk about your message on the professional side of the business?

I think our message is being fairly well received. If you talk with customers or talk with consumers on the professional side about their hierarchy of needs, their first ... is to have a great product, [and] especially as we become a more mobile society, a great notebook product. Weve got leading-edge products. Thats Step 1 of our message. Step 2 is very simple: Your brand is built on the after-purchase experience.

We have made continuous strides and improvements over the past year in terms of providing better value and service for our customers. Step 3 goes back to the first step of our overarching strategy, which is [that] youve got to have competitive price points. We provide great value because weve driven a lot of cost out of our business. We pass those savings on to our customers. Once you have that, you get to the fourth point, which is that affordable customer intimacy. Youve got to know your customer needs.

In this changing PC landscape, where does Gateway fit in, and how do recent changes—in particular, Lenovo [Group Ltd.] buying IBMs PC business—impact Gateway?

In the PC landscape, there currently is only one company that can efficiently address the professional, commercial, business market. At this point, that is Dell. I believe well be the other company able to serve this market efficiently.

So youre not particularly concerned with Lenovo?

No. IBM could not make the business work, and thats why they sold it. They just couldnt make it work. I believe we can.

Dell and HP see the international market, particularly emerging markets like Eastern Europe and Asia, as keys to their future growth. Do you share that point of view?

No, not at all. For a PC brand in an emerging market, you definitely have limitations on being able to sell a particular mix. In fact, in emerging markets, you typically sell in a very low-margin ... mix because they just dont have a lot of money.

Looking forward, what do you see as the key challenges for Gateway?

Its convincing more customers that they should give us an opportunity to sell them something. Thats No. 1. No. 2 is delivering high-quality products in a timely fashion. No. 3 is being able to service their needs if there is an issue with the product. Thats what were focused on, three basic things.


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