Ziff Davis Internet
News & Resources for the IT Reseller
NewsReviewsTech AnalysisCommentarySecurityLinux/Unix
My Account |  

Pedro Pereira  
Gateway’s New Chief Should Be Channel-Minded
By Pedro Pereira


Opinion: Gateway has largely missed the SMB opportunity, which it can start to correct by searching for a CEO who understands the channel.


A change at the top always leaves room for uncertainty, speculation and unsolicited advice.

ADVERTISEMENT

In the spirit of all that, I figured I would tackle this week’s resignation of Gateway CEO Wayne Inouye and what the bovine-themed vendor should look for in a replacement.

The sudden resignation of the man credited with leading the Irvine, Calif.-based vendor back to profitability comes as Gateway’s direct sales soften and the company tries to boost its channel business.

Gateway board Chairman Rick Snyder has taken over as interim CEO while the company searches for a replacement.

The official reason for Inouye’s departure is to pursue other opportunities, but that could mean anything, including internal displeasure with the company’s direction.

PointerClick here to read more about the resignation of CEO Wayne Inouye.

Inouye, who took over the company two years ago when Gateway bought eMachines, where he was the CEO, has a background in the consumer-focused retail market. In contrast, Gateway grew up as a direct-selling vendor and owned 190 retail shops dispersed through the country.

The companies’ business models were dramatically different. eMachines was a slim operation that relied on distribution while Gateway had a ton of overhead; its workforce in 2000 had topped 19,000. And before acquiring eMachines, the company had been venturing into other markets, such as flat-screen TVs.

In his restructuring efforts to return Gateway to profitability, Inouye closed down the retail shops and placed eMachines executives in many of Gateway’s top positions. He got shelf space at major retailers such as BestBuy and Circuit City, nixed the TV products venture and cut costs with such moves as sharing components between the consumer-focused eMachines line and the more high-end Gateway-branded systems.

The company had numerous rounds of layoffs, and its employee count is under 2,000 now.

While the moves had the desired effect of straightening the company’s finances, they undoubtedly eroded company resources, including those the vendor could have used to grab market share in the dynamic SMB space.

That dynamic space has been a lifesaver for countless IT companies that took hits from the dot-com bust and the post-Sept. 11 recession.

eWEEK.com Special Report: Focus on: SMB

Vendors attuned to market realities have made great strides to seize the SMB opportunity, while Gateway seems to have focused disproportionately on retail.

The most effective way to reach the vast SMB market is through tight partnerships with the VARs and integrators that understand the needs of small and midsize customers. To make them effective, such partnerships require a solid technical and marketing support structure.

To be sure, Gateway has increased its channel presence in the last year or so, for which it has won accolades from some quarters in the channel. But it must sharpen its channel focus and invest even more in an effective SMB strategy.

For instance, said one Gateway partner, the vendor should have consultants in the field working with VARs to nurture long-term customer relationships.

The company already has taken steps in the right direction by moving some direct accounts to the channel and implementing a policy of compensating account representatives the same for direct and channel sales.

Gateway also opened a call center with 100 account executives to work with channel partners.

PointerGateway makes indirect commercial sales a priority. Click here to read more.

These are good steps on which to build, and as the Gateway board seeks a replacement for Inouye, it should insist on channel experience as a main qualification for the post.

The worst thing Gateway could do would be appoint a CEO bent on returning the company to the glory days of direct selling and Holstein-themed commercials.

Nothing against the cows, you see, but the direct model has limited potential. And if Gateway has any hope of truly penetrating the SMB market, it has no choice but to work with the channel.

Hiring a CEO that understands this go-to-market tenet would be a smart strategic move.

     
Email


TALKBACK

MICROSOFT RESOURCE CENTER
Free Hands-On Training Lab
Find out how key features of SBS 2003 can help you open up a new line of revenue. Register now >>


SBS 2003 Sales Reference Card
This handy reference card contains features at a glance, sales objection handling, pricing guidelines & more. Get it now >>


Microsoft Empower for ISVs rewards your big idea with big benefits and support.
Access key development tools at a low cost to help you develop that idea into an innovative application. Learn more >>




 
FREE WHITE PAPER
Changing Business for the Better: A Practical Guide to BPM


This paper provides an overview of the benefits of BPM technologies and identifies the characteristics of BPM solutions that lead to successful BPM process-centric integration projects.


Download this free white paper to learn more!


>> brought to you by IBM

Attention Microsoft Solution Providers!



Want to gain a competitive edge? Try Microsoft Watch – FREE!



Each week you receive:
  • Microsoft News and Insider Information
  • Expert Analysis
  • Code Names of Upcoming MS Products
  • Year-Ahead Calendar, updated monthly



    Click Here to sign up now for your FREE 14 Day Trial to Microsoft Watch.
  •  
  • Add up to $1,200 of value with the new BONUS PACKS.
  • HP PartnerONE: The key to increasing your margins.
  • HP Compaq nc6129 Business Notebook. $1149 Smart Buy
  • HP xw8200 workstation. Smart Buy price $1549.
  • ProLiant DL360G4p server: HP Smart Buy price $1647
  • Microsoft files new anti-piracy lawsuits. Learn more.
  • New offers with Windows Genuine Advantage.


  • POPULAR TOPICS
    CHANNEL INSIDER BUYER’S GUIDE
    •Catalog Publishing
    •Dealer Management
    •Order Configuration
    •Price Management
    •Sales Management

    View All >

    CAREER CENTER
    Search the jobs you want & get the info you need – post your resume here today!

    Powered by Dice
    SPECIAL REPORTS
    White Boxes
    MS vs. IBM
    Linux in the Channel
    Network
    CHANNEL RSS FEED
    Stay in the Zone
    Put The Channel Insider on your desktop.
    FREE NEWSLETTERS
    Subscribe to The Channel Insider: Channel News, Reviews, Resources and more.

    Make your selections below:


    Contract Watch

    The Channel Insider Update

    Preferred e-mail format:

    Enter your e-mail:


    view all newsletters >>
    Channel Insider Quick Links
    Ziff Davis Footer Logo