Gateway Leader Pushes Customer Intimacy

Under CEO Wayne Inouye, the once-shaky company is set on playing to its strengths to grow in the commercial space.

When he took the reins at Gateway in March 2004, Wayne Inouyes first job was to right a company that had been battered by the tech slump and the rapid commoditization gripping the PC business.

Fifteen months later, Gateway is on a more secure footing, with three consecutive profitable quarters, something the company hadnt seen for more than three years.

With a firmer financial base and a game plan that calls for playing to its strengths, Gateway Inc. and its CEO are looking to grow the business, relying in large part on the commercial marketplace.

Executives with the third-largest computer maker in the United States say they are going to do this by offering focused product lines and an approach that makes customers want to do business with Gateway.

"Its about creating customer intimacy," Inouye said in a recent interview with eWEEK. "We have to be nicer, more approachable, more responsive to our customers."

/zimages/3/28571.gifClick here to read a question-and-answer interview with Inouye.

By the time it acquired Inouyes former employer, eMachines Inc., for $289 million, Gateway had undergone a series of transformations in hopes of stemming the financial bleeding.

The last strategy before the eMachines acquisition had been the idea of Gateway as a "branded integrator," relying heavily on consumer electronics and the companys 200-plus Gateway stores.

In short order after the eMachines deal, Inouye—who replaced founder Ted Waitt as Gateway CEO—shuttered the stores, slashed the payroll, outsourced manufacturing, trimmed the management ranks and moved the companys headquarters from Poway, Calif., to Irvine, Calif. The moves were "all about getting our cost structure in a position to compete," Inouye said.

Leslie Fiering, an analyst with Gartner Inc., said Inouyes moves should help Gateway compete in a hypercompetitive PC industry that is seeing the latest replacement cycle wind down and consolidation continue. "Its going to be a tough ride, and for anyone who doesnt have low margins, theyre going to be in trouble," said Fiering in San Jose, Calif.

Fiering and other analysts think Gateway needs to improve in its commercial area, particularly in the messaging and services surrounding it. Gateway is in a crowded market populated with companies such as Dell Inc.; Hewlett-Packard Co.; and Lenovo Group Ltd., a strong player after buying IBMs PC business.

Inouye and other Gateway executives said their message of good products at a good price, combined with high-level customer service, is paying off.

Next Page: Gateways customer-centric focus.