Gateway starts afresh with PC configurability

Gateway plans to overhaul its consumer PC line-and sell configurable models exclusively through its website and call centres.

Gateway plans to overhaul its consumer PC line-up and sell configurable models exclusively through its website and call centres.

The company has replaced the 700, 500 and 300 series PCs on its website with 7200, 5200 and 3200 series PCs and greatly expanded the number of configuration options, including processor, memory and hard-drive size. Options on the older PCs were limited to a few accessories such as monitors, printers and software.

After completing its acquisition of eMachines in March, the combined company looks much more like eMachines than the old Gateway. There have been numerous changes in the way the company does business, such as the closure of the Gateway retail store network and new partnerships with retailers.

New chief executive officer Wayne Inouye has instilled an eMachines-like culture of cost reductions and product simplification. Gateway has laid off thousands of workers, backed away from its consumer electronics strategy and moved to standardise its PCs on a limited number of designs to reduce component costs.

Gateway spokeswoman Kelly Odle said the company was still committed to direct sales. Direct sales allow PC suppliers to cut prices or make bigger profits as distributors and retailers don't take a cut of the sale. The direct sales strategy allowed Dell to undercut its PC rivals while maintaining healthy margins, and almost drove the old Gateway away from PCs in favour of more profitable consumer electronics products.

The new Gateway uses e-Machine's value equation method to determine which configurations to use as starting points for direct sales. Under the old system, Gateway relied on trial and error.

The price of the new low-end Gateway 3200S PC reflects the new-found discipline. It costs $499.99 (£275) with a 17in CRT monitor and has a Celeron D 330 processor at 2.66GHz, 256Mbytes of PC2700 DDR SDRAM, an 80Gbyte hard drive and a CD-ROM drive.

Dell's entry-level Dimension 2400 costs $469 with a 17in monitor after a $50 rebate, but has a slower processor and a smaller hard drive. HP's Compaq SR1000Z series PCs are the cheapest systems available on its website, starting at $323.99 but without a monitor. A 17in CRT display costs $99 on HP's website.

The new Gateway 3200 series features the low-end 3200S, the mid-range 3250S and the high-end 3200XL PC. Each series uses the same branding strategy to differentiate the PCs, but each PC can be configured with different components or displays.

The Gateway 5200S comes with Intel's Pentium 4 520 processor at 2.8GHz, 512Mbytes of PC3200 DDR SDRAM, an 80Gbyte hard drive, a 17in CRT monitor, and a CD-RW/DVD-ROM drive for $849.99.

The Gateway 7200S comes with the Pentium 4 540 processor at 3.2GHz, 512Mbytes of PC3200 DDR SDRAM, a 160Gbyte hard drive, a 15in LCD and a DVD+/-RW drive for $1,249.99. The entire 7200 series is based on the new BTX motherboard design promoted by Intel.

Tom Krazit writes for IDG News Service

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