Like PC competitors Hewlett-Packard Co. and Dell Inc., Gateway Inc. is busy planning the next major phase in its diversification strategy: more than a dozen new consumer lines, including its own digital cameras.
Gateway currently plans to deliver three still-image cameras, with resolutions up to 5.25 megapixels, according to sources.
Gateway spokesman Brad Williams confirmed that the company plans to enter the digital still camera market later this year, but declined to comment on when the products would be officially launched as well as their pricing.
The extension into digital cameras is just part of the diversification strategy the company is now pursuing, prompted by cutthroat competition within the PC market. Analysts now call Gateway a branded integrator, rather than a traditional OEM.
HP, of Palo Alto, Calif., on Monday rolled out 158 new consumer products, ranging from printers to digital cameras to computers, in what Chairman and CEO Carly Fiorina called the largest product launch in company history.
Gateway, of Poway, Calif., has committed to launching 50 new products in approximately 15 new consumer lines by the end of the year, a Gateway spokesman said. The majority of the new wares will roll out by Thanksgiving, in time for the holiday season.
“Were looking to make Gateway the store for digital photography, both with highly trained people and redesigned stores,” Williams said. “Were currently redesigning our stores right now for the holiday selling season.
“One of the outcomes is that were presenting ourselves as a new and different destination for digital photography,” he added. “Were going to really appeal to those families who want to get into digital photography and need help.”
According to Gateway, three cameras will be released: the 4.1-megapixel DC-M40, the 2.1-megapixel DC-T20, and the 5.25-megapixel DC-T50. In terms of resolution, the DC-T50 will be slightly more powerful than the HP PhotoSmart 945, released as part of HPs massive consumer launch. However, the Gateway spokesman cautioned that the companys plans could change before launch.
Gateways entrance into the digital-camera market could make a serious dent, judging from the companys other recent efforts to diversify. Two months after its launch, Gateways 42-inch flat-panel television is the highest-selling model in its category, according to Gateway, using data supplied by retail analyst NPD Intelect.
Currently, Gateway sells a number of digital cameras from several manufacturers on its Web site—including two cameras from rival Hewlett-Packard. Williams declined to specify whether Gateway will continue to sell HP cameras.
Can Gateway Compete
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.