When Gateway Inc. bought eMachines Inc. for $290 million in March, there was concern among enterprise users that the PC maker was going to exit the commercial business, focusing instead only on consumers.
That is not going to happen, said Tim Diefenthaler, director of enterprise servers and storage products at the Poway, Calif., company.
Over the next few months, Gateway will roll out a host of laptops, desktops and servers, which will not only offer the latest technology but also streamline the companys product offerings.
That comes as good news to David Kirkland, IT director at MasterCraft Boat Co., which, over the past three years, has standardized its infrastructure on Gateway computers.
“In the beginning, you think, Whos going to be the winner in all this—[Gateways enterprise business or eMachines consumer PC business]?” said Kirkland in Vonore, Tenn. “Theres some questions that come into play. But the direction theyre going—the consumer business is really eMachines, and Gateway is the business side—is a good split.”
Kirkland said his primary concern when Gateway bought eMachines for $290 million in March was that Gateway would stop keeping up with the technology curve in its commercial business. But Gateway officials said that wont happen. Gateways enterprise business makes money, an important fact for a company pushing to return to profitability next year after several years in the red.
“The [new] management knows that its important to have this enterprise business,” Diefenthaler said in an interview with eWEEK. “This is a hidden gem that really can help them grow the balance sheet.”
Gateways enterprise business makes money, and will be a key component in the companys push toward overall profitability, said spokesperson Ted Ladd. President and CEO Wayne Inouye is pushing to return Gateway to profitability in 2005.
In the second quarter, Gateway lost $339 million on $838 million in revenue.
The company has undergone dramatic changes in the four-plus months since the purchase. During that time, Inouye—the former eMachines CEO who took over the top post from Gateway founder Ted Waitt—has closed the 188 Gateway retail stores around the country, streamlined the management structure, initiated plans to shrink the payroll from about 7,500 at the beginning of the year to less than 2,000 by the end of 2004, and shut down a facility in Sioux Falls, S.D.
In addition, Gateway recently entered into a deal with Best Buy Co. Inc. to sell Gateway-branded products on shelves alongside eMachines computers, and also is negotiating with other retail outlets.
In much the same way that the company as a whole is pushing to increase efficiencies, the same can be said for the enterprise products group. Gateway will re-emphasize its focus on small and midsize businesses, officials said. Gateway currently has some large Fortune 500 customers but will concentrate now on SMBs and the public sector.
Over the next few months, the company will roll out new laptops, desktops and servers, which will not only offer the latest technology, but also enable Gateway to streamline their product offerings. The company also is going to take advantage of the supply chain efficiencies developed by eMachines and the ability to share common parts to help drive down the pricing of many of these products, or enable the company to offer more features for similar prices as older models.
For example, Gateway currently offers nine models in its line of mobile PCs—everything from a slate tablet to thin-and-lights to desktop replacements. The new lineup, which will roll out throughout the rest of the year, will feature seven laptops, including a new thin-and-light model, the M320 Series, and a new desktop replacement notebook, the M520 Series. The new systems will first roll out to consumers, while models for businesses—which offer such features as networking capabilities—will start appearing in the fourth quarter, said Ken Loyd, director of business marketing at Gateway.
The systems will offer everything from Intel Corp.s consumer Celeron line of processors to its high-end Pentium 4 chips and will range in starting price from $699 to $1,400. By early 2005, biometric capabilities will be incorporated in all of Gateways notebooks, Loyd said. The company currently offers embedded biometrics in its 450+ notebooks.
For desktops, Gateway in October will roll out the E-Series 6300, which will feature the new BTX chassis, designed to improve airflow through the machine and reduce the amount of noise and power consumption compared with the ATX chassis currently used by PC makers, Loyd said.
The ATX chassis is running out of thermal headroom, requiring more exotic—and noisier—systems to cool the components as they run hotter, Loyd said. The BTX design, which eventually will be adopted by all PC makers, offers larger fans that run at slower speeds. In addition, components inside the chassis are moved around to take better advantage of the airflow, Loyd said.
In addition, the new Gateway desktop will use the 915G chip set from Intel, which will offer DDR2 memory.
In September, Gateway will upgrade its SB Series PCs for small businesses. The new 3200 Series will offer connectivity via an integrated 10/100 Ethernet component and will be based on the companys GEM (Gateway and eMachines) chassis, which will offer one more internal bay than the current SB 310, a different motherboard design—though the same 845G chip set from Intel—and support for a wider range of processors.
In addition, Gateway will update its Profile all-in-one PC with the release of Profile 5.5 next month. It also will offer the 915G chip set, as well as Serial ATA hard drives and a 128MB discrete graphics option.
The company also is streamlining its server offerings, reducing from seven to six the number of systems it will offer. In the third quarter, Gateway will roll out the replacement for the two-way rack-optimized 955 system, which will come with the new “Nocona” Xeon chips from Intel. The 32-bit Nocona offers Intels EM64T 64-bit extension technology, as well as DDR2 memory support and an 800MHz front-side bus.
The following quarter, Gateway will roll out two more two-way systems, the replacement for the rack-optimized 975 and a system that will replace the 960 and 980 tower servers. Both also will feature the Nocona chip, Diefenthaler said. He said Gateway in the first half of next year will upgrade its four-way 995 server, but will not grow its line beyond four processors.
On the storage side, Gateway is offering a new chassis for its 860 SAN (storage area network) appliance with SATA capabilities. Later this quarter, the company also will offer a new autoloader, the LTO2HH, which doubles the backup capacity of the current 820 from 1.6TB to 3.2TB.