Gateway Computers: Case Study #2

Gateway Computers: Case Study #2

September 18, 2008

Gateway Computers

College dropout and entrepreneur Ted Waitt embarked on all his wildest dreams with nothing more than a three page business plan, $10,000 loan from his grandma, and a used computer. In 1989, four years later, Waiit became the first in the computer industry to sell computers online. He serviced the online market solely until Dell began using online selling in 1996 to capitalize on this niche and steal market shares from Waitt’s company. Yet, Gateway Computers continued to boom until the late 90’s. Many successful tactics like the distinguished and bold Gateway cow-print boxes used to help set them apart from competitors. More so, Gateway gained much popularity because of their capability of producing specialty computers and tailoring their products directly to consumers needs through online, phone, and face-to-face selling, which is what they eventually became known for. This was a huge selling point for Gateway. As their success continued, Waiit took the company public in 1993. He became an instant millionaire and eventually a billionaire. In 1996 he made another bold move and launched various Gateway Country Stores in which potential customers could try out products and have personalized one-on-one discussions with knowledgeable reps. By 2002 Gateway had over 200 Country Stores. Unfortunately Gateway was struggling to turn profits (as were most companies in the industry with the exception of Dell). In struggling times and having the unnecessary overhead of the Country Stores, Gateway was forced to make a big move. They did just that. Gateway acquired eMachines in early 2004 and made former eMachines CEO Wayne Inouye their acting CEO. Inouye immediately did away with all of their retail locations, downsized, and began to outsource. He is widely known for his success with eMachines in turning immense profits with few costs and employees. Currently Gateway is trying to...