Submitted by- Apeksha Gupta

Roll No.- PGP12216

“Gateway: Moving beyond the box”
About the company
During the 2000s, it was second only to Dell in terms of direct PC distribution.
It was the world's fifth largest PC manufacturer. Its primary focus was on home clients, whereas
Dell focused on corporate clients. It primarily used two channels to sell and build relationships:
the internet and the telephone.

Ted Wait and Michael Hammond, who founded Gateway in 1985, are the focus of this case.
Gateway was an American company that manufactured, promoted, and sold computers and
computer equipment. Their corporate headquarters were located in the United States. They
were successful because they had a solid marketing strategy and a fantastic service to offer.
IBM and Dell were among its competitors, and it came very close to defeating Dell. In terms of
the direct distribution of PCs, it came in second to Dell. Gateway discovered five revenue
streams in the hexagonal structure of the company, including software and peripherals, Internet
access, content/portals, service and training, and financing.They used the Internet as a sales
distribution channel while focusing on developing personal relationships with their clients. As
their three distribution channels, they used the phone channel, the internet channel, and closed
rural stores. They also had their own website, Gateway.com. The average unit cost (AUP) of a
Gateway computer in 1999 was $1,845. Although their unit sales increased throughout the
1990s, they saw slower growth than its competitor, Dell. Dell's success was overshadowing all
of Gateway's accomplishments. Additionally, there was fierce competition in the sector, which
had a negative impact on both profits and pricing. Additionally, the name Gateway 2000 was
close to being forgotten. They had to devise some drastic alterations in their approach to
overcome all of these obstacles.

Key issues
1. Distribution Channel- A pressing issue is determining how to effectively leverage
distribution channels to market various hexagonal pieces.
2. Transition to Service Provider- Given that every company is becoming more
relationship-oriented, is this a good strategy for Gateway?
3. Market Leader Strategy- With sales roughly half that of Dell in 1999, Gateway required a
rapid shift in strategy to remain strong and market leader in computer hardware.

Recommendations
1. Focus on Bricks and Clicks Strategy- This strategy would increase Gateway's
dominance in the United States by improving customer service and expanding
geographical presence, but it does not eliminate other channels.
2. Focus on Product Related Services- Should concentrate on its core competency of
creating customised products and developing complementary assets such as services
that are not imitable.
3. Sell PCs through employee benefit programs- A hybrid of corporate and consumer sales, this
allows Gateway to offer more SKUs without incurring high marketing costs.