Gateway looks to resellers for extra momentum

Gateway Computers is looking to resellers to expand its market presence as it takes over PC Direct's operations and Albany assembly plant, 130 staff included.

Gateway Computers is looking to resellers to expand its market presence as it takes over PC Direct’s operations and Albany assembly plant, 130 staff included.

The US direct PC assembler, which took control of PC Direct on December 15, is considering trying to lure the likes of Computerland and Southmark into a partner programme in which they would give up their reseller role and sell Gateway PCs direct.

As far as staffing goes, Gateway Australia managing director Peter Lees says all PC Direct staff were offered and accepted jobs, with only one deciding to remain with previous parent company Blue Star. He says PC Direct staff will service and support Gateway machines — notebooks, PCs and servers — which will be customised at the Albany plant. Gateway is also considering using New Zealand staff to provide out-of-hours support before the Australian staff come on two hours later, but nothing has been decided.

Gateway follows a two-phase manufacturing process: assembly is done at its Malaysia-based plant, leaving customisation and personalisation to be done at the Albany plant. In some cases Gateway does assemble the entire product in the country of sale — for example, Gateway portable PCs in Australia because it’s cheaper to do it there. But whether that will be the case in New Zealand remains to be seen.

The man charged with working out these details is Gateway Australia’s financial operations manager, Steve Pearson. Former PC Direct managing director David McKee-Wright stays on as Gateway’s country manager for New Zealand and will report directly to Pearson.

As for the PC Direct brand, it will cease existing once market awareness of Gateway is sufficient to ensure there won’t be a loss of sales, says Lees. He believes that process won’t take longer than 12 months. He admits that with only a handful of people on the ground prior to the acquisition, Gateway — rated eighth or ninth in PC sales in Australia — “hardly rated on the Richter scale” in New Zealand.

“That’s why we wanted to buy PC Direct and we’re aiming to get it back into the top five in the country.

“Prior to that we had set up our showrooms and sales were tracking along nicely, and then the power cuts [in Auckland] happened. If you can’t open your showroom it’s really tough. However, we recovered by Q4 — in fact, well beyond our expectations.”

Lees says Gateway, which did around $8 billion in global sales last year, can now give PC Direct all the benefits of global purchasing power, product awareness and R&D. He says changes are in store for the PC Direct sales model but wouldn’t go into detail.

However, last year Gateway Australia struck up a relationship with the reseller channel and Lees admits this could happen in New Zealand. “The money for resellers in hardware is diminishing at a rate of knots. We started doing analysis a year ago and then we put together a partners programme.

“We’ve gone to traditional resellers and said — take out of your cost structures the cost of warehousing, capital, order management and freight. Take it all out and what does that do for your business? Nine times out of 10 they said it was more profitable. We then said, we’ll make you an offer: You focus on services and we’ll focus on taking orders for PCs and shipping. It works in two ways. We can get our customers to go to them for service, they can give us sales leads and we pay a commission of 3% to 7%.”

In Australia Gateway has about 50 partners and is looking at bringing the programme to New Zealand. “Compaq has been saying that it will go direct for so long now. We decided, why don’t we go to the resellers.” Ross Allan, head of fellow direct seller Dell New Zealand, has already hit the ground running with a similar programme.

On the product side Gateway intends to sell its entire range in New Zealand.

Gateway’s G Series is specifically built for the consumer market and accounts for 40% of sales. The E Series, a corporate PC with TCO (total cost of ownership) features, will be one of the first products to be pushed. In between is the GP Series — a corporate based product with out the TCO features.

It is unlikely that Gateway will continue PC Direct’s relationship with Toshiba (PC Direct was the biggest reseller of Toshiba notebooks in New Zealand).

Another relationship casualty will be PC Direct’s business with chipmaker AMD. Gateway machines are exclusively Intel-based, although Lees says that as PC Direct products are phased out Gateway will continue a relationship with AMD for support.

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