Gateway Aims to Reinvigorate Direct Sales

Gateway says its latest turnaround effort is on track.

The Irvine, Calif., computer maker, whose CEO Wayne Inouye resigned on February 9, said that its making progress on numerous fronts, including beefing up its direct sales—later this quarter, it will open a new customer support center to serve those customers—as well as searching for a new CEO.

Gateway, which acquired eMachines in 2004 to make it the third-largest PC maker in the United States, has been credited for returning to profitability following a string of quarterly losses.

But, while Gateway has made a successful entry into the retail PC market, its traditional direct sales suffered. Following Inouyes departure, Gateway management made fixing direct sales a priority.

Five months after taking over as interim CEO, Rick Snyder, who also serves as Gateways chairman, said the company is now on track to appoint a new CEO this fall.

Its also undertaken several initiatives designed to help reinvigorate its direct sales. One such action is its plan to open its Best Practices Center, a service and support call center in North Sioux City, S.D., Gateways former headquarters, where the company still has 1,000 employees.

/zimages/1/28571.gifClick hereto read about how PC makers are wheeling and dealing to fend off slowed growth.

The Best Practices Center, announced July 13, is “part of a fundamental focus on customer satisfaction. Thats one of the things that we think is going to drive our success near term and long term,” Snyder said in an interview with eWEEK.

“We are hopefully going to continue adding significant increments to improve our customer experience and customer satisfaction.”

The center, which will employ 130 people initially, will handle service and support calls from business customers as well as its consumer direct customers. Those calls are currently handled by third parties.

Tools used by the Best Practices Center employees as well as their knowledge will be passed on to other Gateway support organizations to ensure a consistent experience, Gateway representatives said. The center will also provide feedback to the companys product teams.

Products are also important. There, Gateway is appointing new executives to run its direct sales effort and announced plans to build a new manufacturing plan in Nashville, Tenn., for desktops, notebooks and storage arrays. Those products are currently built by third parties.

Under the direction of Bart Brown, Gateways newly-appointed senior vice president for direct sales, who rejoined the company earlier this year, Gateway reorganized its sales strategy for consumers.

It stopped selling low-price PCs direct to consumers on June 29. Now it offers those customers desktop PC bundles that start at $799 and notebooks that open at $999.

Brown said in a recent interview that the move aims to give customers an easier way to purchase a bundle that includes value for the dollar by incorporating displays and software such as Microsofts Office.

Ultimately, however, Gateway is trying to regain some of its old cache as a price-performance PC maker, he said.

Gateway will continue to sell its lower-priced Gateway and eMachines-brand PC models, via retailers.

Meanwhile, despite persistent rumors that it may be an acquisition target, Snyder said that Gateway is not for sale.

Snyder intends to stay on as Gateways chairman, after handing off the reins of CEO, he said.

“I feel good about the [search] process and where its headed,” he said.

Snyder indicated an appointment announcement could come as soon as late September or October.

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