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Gateway To Close All Retail Stores
John Lazzaro writes "Looks like Gateway is throwing in the towel and closing all of its remaining retail stores, according to a Reuters/Yahoo! report." The story notes: "Gateway's stores, which will be closed on April 9, have long been criticized by analysts and investors as an expensive drag on cash flow because of lease costs and the difficulty of managing inventories", and goes on to suggest: "...with [the acquisition of] eMachines, Gateway doesn't necessarily need the added distribution channel the stores gave the company. In addition to selling Gateway's wares over the phone and via the Internet, eMachines PCs are sold at major retailers such as Best Buy."
Who needs April Fools when you've got capitalism?
Tee hee!
First funny story all day, because it's true!
They need the resources to open stores in India. All the people they're paying to do tech support need somewhere to buy computers.
April Fools! Ha ha ha! ...eliminate about 2,500 retail jobs...
Oh.
RTFpress release. This story's legit.
http://alternatives.rzero.com/
Back to the barn. Moo
Opera Watch - An Opera browser blog.
If their decision to fire me last month had anything to do with this...
The Gateway Store was mainly a "showroom" environment because Gateway's main product is a made-to-order PC. Gateway could never get into a Best Buy or Circuit City environment because they didn't want to cheapen their customizable image by providing computers that would sit on shelves. Meanwhile, eMachines is the sit-on-the-shelf cheap PC that you can find at Best Buy and Circuit City along with discount environments such as Wal-Mart.
Shutting down the stores is more or less a nod to the retail chains that they can have eMachines all to themselves, and there's no danger of having to compete with eMachines coming out of a Gateway Country store. Even if those eMachines PCs had a "Gateway" sticker on them, it'd still be just as bad to the retailers... they don't like suppliers who are trying to undercut them by operating their own retail stores.
This is one of the forces that limits Apple's distribution. Apple choses to sell mostly directly and therefore they aren't making much of a push to get themselves into major retail chains... Since Wal-Mart can't undercut Apple's prices, Wal-Mart's not particularly interested in having Apple.
So, there's a nice firm wall going up at Gateway. Made-to-order PCs will be ordered by phone or Internet and be stamped Gateway, mass-made machines will be in retail stores and called eMachines. Everybody should be happy...
Although Apple seems to be doing quite well in retail, Gateway was losing money hand-over fist. (Gee, think that could have anything to do with quality?)
My prediction: Either they merge with another company or they'll be out of business within two years.
Lawrence Person (lawrencepersonh@gmailh.com (remove all "h"s to mail)
http://www.lawrenceperson.com/
Dell doesn't have any retail outlets, or even sell computers in the usual chains, so Gateway isn't necessarily doomed...
but I don't think Gateway's build-to-order system is as well running as Dell's.
When I asked them about Linux, or a machine without an O/S, I was told "Microsoft won't let us do that." Double Duh.
In short, it was about the most useless showroom experience I've had in a long time. Gateway will lose nothing by shutting these turkeys (cows?) down.
Indeed, otherwise such stories - if false - might negetively affect Gateway's stock. Yahoo might be in for some A/F humour, but wouldn't chance a story of this type because of the possible legal repercussions.
What exactly could those stores accomplish that could not be done with a kiosk in a shopping mall (kind of like their biggest competitor)? Like the article said, they were simply a money drain and keeping inventory in the store kind of defeats the purpose of the build to order model. Now if only Dell would get out of the super-saturated consumer electronics market and we just might see Dell and Gateway going back to competing to build the best computers (wishful thinking, I know).
Their litigation has helped fight spam. Good Thing.
--
the strongest word is still the word "free"
no, just the droppings.
This is understandable, i suppose, as you can keep more profit without the overhead associated with brick n' mortar stores, but still, the stores had a use.
I remember trying to help my dad buy his next computer, and it really helped for me to be able to take him to the store and for him to physically see the computer he was going to buy. While large computer outfits can do this too, it was better, conceptually, for him to go to a store that only had one brand of computer, and they weren't all in the back next to shelves of accessories and idiot salesmen (like at CompUSA or Fry's.)
Especially for the over 45 crowd, adoption of internet-based sales can be a little discomforting. While i haven't a problem with it, Gateway's target audience just might.
filter: +3. Hey, look! all the trolls went away!
I imagine that part of the choice to close retail shops is the simple fact that you have to pay tax in states that you have a retail presence in. On a $400 pc, this could be easily $40.00 in taxes even if you mail order it. If you buy it local, that's great, but if you buy it via mail order, you get stuck with shipping and tax. This can really add up for those who buy their more premium solutions via mail order.
There is no sanctuary. There is no sanctuary. SHUT UP! There is no shut up. There is no shut up.
Dell has stores in about ten states.
. as px/kiosk?c=us&cs=19&l=en&s=dhs
No idea if they're profitable though.
http://www1.us.dell.com/content/topics/segtopic
I had a client who would not switch to Dell or anyone else becuase there was a Gateway store near his house. I have HATED Gateway for years because of several bad experiences with them. Even after relating these to him, he would not switch his company to Dell because of that store. Well, I guess he just lost his reason.
Great ideas often receive violent opposition from mediocre minds. - Albert Einstein
Seriously, I used to check my email at Gateway stores all the time. Now it's going to be hard to find a place. Try checking your email at a Radio Shack to see what I mean. They freak the moment you navigate off the Radio Shack website, screaming that they "hear about it" from the main office whenever this happens.
The flag just makes more sense than the constitution. - Judas Gutenberg
This post modded interesting because...you didn't know something?
The closing isn't surprising at all. To sell at a store like this, you need to have a more attractive product. Gateway had the Profile, which was not a good product. It saved space, but it performed poorly, and was not designed to be easily maintained. It was similar to the iPaq in these respects, and neither succeeded. They failed to attract certain market segments that made the iMac popular, namely education.
Besides that, all they had were a bunch of run-of-the mill computers. Their company really did not have much vision. And when they made an interesting move (acquiring Amiga or saying that DRM is bad), they didn't follow through with it.
The future of Gateway looks pretty bleak. I think in this move they are probably looking to be acquired. They have never really got it. Trying to show vision, and then turning their back on that vision. Poor service, trying to undersell, not finding a customer base.
Lawrence Person (lawrencepersonh@gmailh.com (remove all "h"s to mail)
http://www.lawrenceperson.com/
People getting fired in an already bad economy isn't funny
i just called gateway store in Corona, CA.
Talked to some guy, and he said yea, theyre closing. Should have a big sale, but doesnt know when.
I'm gonna call back saturday and see..
hope i can score some cheap shit!
-Grump
Is it true that more people vote for the winner of American Idol, than vote for the president? -Ali G.
the country stores didn't really make sense in a lot of areas around the US, people look for computers at big stores like best buy or good guys, or look online. Gateway will now compete in both places(thanks to emachines), and not have to rent a bunch of storefronts to cater to only a few passer bys each day. Those stores required quite a few employees to operate, and didn't generate a lot of business, except in places like New York or Manhattan where those type of stores are popular.(I bet they will keep a few open there) They just trimmed the fat in my opinion and I think it was a good move
EMachines sells set configurations to retail outlets. Gateway makes machines "custom to order" Even when buying at the physical store you frequently have your PC shipped from the factory.
Micron tried to combine these markets by selling made to order machines at Best Buy but it didn't really catch on.
Maybe with this merger a there will be a Gateway retail brand too. It could be a more expensive alternative to the EMachine base system.
I think you're confusing cause and effect here. Apple chose to go direct precisely because their forays into big box retail had been so unsuccessful. BestBuy, Circuit City, Computer City, Office Max, Sears - Apple has tried them all. In every case Apple's products were marginalized by big-box salespeople who didn't know the first thing about Apple technology and had no interest in learning about it.
Apple's retail presence is far greater now that they control presentation of their products. They've selected marquee locations and they showcase Apple products "in the wild" so customers can play with Macs, digital video cameras, add-on devices, and so on.
Wal-Mart was founded on deep price discounting. Volume of sales for already established commodity products is their bread and butter. Wal-Mart is, as you pointed out, not interested in getting into a business where they can't undercut the competition. Apple is likewise uninterested in making a deal with Wal-Mart, because they'd rapidly lose control over the value of the Apple brand.
Read the EFF's Fair Use FAQ
You know, I remember when the first Gateway store opened around here, and it was a big event! People flocked from miles around to gape at the amazingly fast new home computers running Windows 98. They even had a real cow outside of the store to comemorate it--no really! People thought Gateway was cool back then, but now...well, maybe it's for the best!
- "Oh, forget the cable, I was really looking for a laptop like that one, can I see? Oooh. Nice. Ah. Color? Neat. Hmmm. Say I could use something like that -- say how's the screen in bright light, I notice that it's rather dark in here."
What we had there was a failure to communicate.It's great -- how do you spell your mother's maiden name?
"Could we remove it from the shackle for a minute and take it near the window to get an idea?"
Sorry, we're not allowed to do that -- its against our security policy. Do you rent or own?
"No, no, I don't want to take it OUTSIDE, just over near the, er, tinted *sigh* window to get an idea how...
"Will you want a printer with your purchase?"
So, good bye Gateway Stores -- you sucked and we're better off without you.
-- @rjamestaylor on Ello
Gateway is trying to diversify into consumer electronics: Televisions, MP3 players, and so forth. This seems like a good idea to me, since competing with Dell on PCs is difficult.
After the Gateway stores close down, how will they peddle their consumer electronics? Unlike PCs, customers want to see and hear these products perform.
$3000 will also buy a brilliant 42" Samsung DLP monitor, which actually supports HDTV resolutions (the gateway display is EDTV-only), has more video inputs and doesn't burn in or ultimately leak the contents of its screen into open atmosphere.
-- I wanna decide who lives and who dies - Crow T. Robot, MST3K
Let's not fool ourselves into thinking that Gateway knows things we don't about how to plug in a PCI card or install a HDD.
They failed to underestimate the "I want it now" of customers. If they want to wait, they will order online for a few dollars less.
It would have worked if they had put a single, well-trained tech in every store to "customize" your box (the computer you pervs), and boom, you're out the door with a custom Gateway PC in 15 minutes. If you want a burn-in, pick it up tommorrow.
Or is a factory-built PC somehow special (having been in a few assembly plants, don't count on better, necessarily.)
Faith is the very antithesis of reason, injudiciousness a critical component of spiritual devotion. Jon Krakauer
At what point do Gateway become Beleagured?
They've been described as being Troubled for a while and I was wondering if there's a scale of adjectives that journalists use to describe how deep in shit a company is.
If I remember rightly Apple went straight to Beleagured status almost overnight, and stayed that way for around five years!
Gateway was reselling CPU time on the PCs showroom PCs in all of their stores for companies to use as a private computing grid. So what happens to the grid? Do they just put all of the PCs that were in the stores in a warehouse and run the grid there? They just signed a new customer a few weeks ago.
This must come as shocking and horrible news to all Slashdot readers. This totally ruins my plans (And yours too probably) of going to the Gateway store and buying a wonderful computer.
_________ Help me get a PSP!
Was it a year or a year and a half ago? At any rate one of my buddies was a manager at a Gateway Country store. I can remember him talking about days going buy with next to no one comming in the store and being "forced" to play games all day. When his store was closed in the first wave he and a bunch of the other ex-gateway employee banded togather to form a new store - where they play games all day.
/.ers near a closing Gateway check it out. If not for the tech they had some great office stuff.
Also something to note: THE LAST WAVE OF CLOSINGS HAD GREAT GOING OUT OF BUSINESS SALES. Any
"Capital punishment makes the state into a murderer. Imprisonment makes the state into a gay dungeon-master"
Mainstream news is picking this story up as well. One of the news television channels my dad watches was just showing this on its ticker.
Before I saw that, I assumed this was BS as well.
Just because they didn't charge you the sale tax for your state doesn't mean you don't have to pay it.
Matt Slot / Bitwise Operator / Ambrosia Software, Inc.
IMHO, Gateway's retail stores were doomed from the get go. Perhaps the target customer for the stores was someone who, unlike me, wouldn't otherwise go to Gateway's web site, but for me I found the stores to be next to useless. Why?
Well, at least when I went in a few years ago, you could not actually buy a computer from the store, per se. They would order one on your behalf, to be shipped to your house - in other words, exactly what would happen if you simply ordered the computer from their web site, complete with the shipping charge and the accompanying delay in getting your computer. In fact, I think if you elected to order one, the salesman would literally log in to the same Gateway web site that everone has access to and enter your information for you.
All the stores amounted to, then, was a place to see the hardware and use it hands on before you made a purchase - in other words, not really that useful at all.
Apple stores, on the other hand, will probably be successful in the long run, I suspect. Why? Well, first, at least in my area, they seem to actually have selected good locations, where there is a lot of foot traffic, and they always seem to be crowded. Second, you can buy pretty much anything you see in the store, on demand. Third, the Apple brand and their reputation, to go along with the fact that to the average consumer, Apple's products look and feel cool and hip, not like the boxy PCs sold by Dell and Gateway.
Understanding is a three edged sword. - Ambassador Kosh Naranek, Babylon 5
The truth of the matter is that e-machines acquired gateway - and got PAID to do so. Don't believe me? Here's the story - pieced together from articles from PR from the last couple of months.
...Of the 17 people reporting to the Waitt, 15 were out right fired and replaced with e-machines leadership. The remaining three (including the CFO) were demoted in title.
About 12 months ago Gateway Founder and CEO Ted Waitt ran into a man named Wayne Inouye, CEO of e-machines at a trade show. At the time GTW was trading at $3.50 - below cash value of the company. Inouye was interested in doing a leveraged buy out. The combined force of e-machines (4th largest computer manufacturer at the time) and Gateway (3rd largest) would have made a powerful combo. But for whatever reasons the stars did not align. Fast forward 12 months later. Gateway announces that it will "purchase" e-machines for $235MM in cash and stock. Inouye was named CEO and Ted became chairman of the board of the new company. Last Friday is when the axes fell
In my opinion there is more to come -- you see e-Machines is a 138 person company with revenue of (get this) $1.1 Billion. The 7000 people at gateway pull in under 3 Billion. I don't have a business degree or nothin' but it sounds like e-machines is a much leaner meaner company, which - given the new leadership structure - is exactly what gateway will become.
Then you search for Dell and you get images back things like this. For some reason, I really want a Dell now.
I think it would be a good idea for Gateway to franchise out their existing base of Country Stores. That way they could turn a liability into an asset, moving the control of inventory, property, etc. to the franchisees yet still getting a slice of the pie.
If gateway gives some freedom to franchisees, they could become very competitive in the PC service area, offering cheap rates(i.e. flat rates). This is a niche yet to be filled, IMO. There are thousands of home users(and small businesses) with out of warranty PC's that need caring. People want to do it cheaply. End of story.
-D
I think I may just swing by my local Gateway Country store and see if there any 'open box' values to be had. I suggest you do the same!
I worked for a software company in California, and I was asked to purchase a PC for an emergency programming job. Our usual supplier took over a week to get a PC, and I remembered seeing the Gateway store on my way to work.
Thinking the Gateway might be a cut above the HP Pavilion or something I would get at Best Buy I drove over there. There were about 3 people looking at computers -- one was getting a demo of something by a sales person -- a pretty empty store.
It took me 3 minutes to walk around and peruse the various models, and then 10 more to get a sales rep to talk to me.
I pointed at a PC and told him I wanted to get one and asked for a price. When he told me it would take a week to get the PC, I was floored.
"You don't have any computers to sell here???"
"No."
"What's in all these cow-boxes you have along the windows?"
"They're empty."
"So what do you sell here?"
"Well, you can order one here. The store is so that customers can come in and try the machines out and match their needs to the PC."
"But I can order one from home with a couple of mouse-clicks!"
He didn't have much of an answer for that. I drove on to Best Buy and got the Pavilion.
I remember thinking that GW was crazy to open all these stores just so people could look and touch (but not take!) the machines. Expensive real-estate too -- all the stores I saw were in very high-rent areas.
Maybe Inouye can keep Waitt's expensive schemes in check and keep the company afloat....
I work tech support for Gateway. Trust me those computers are verified crap. They put the worst, cheapest parts in all of the systems I've seen.
My favorite is the guy who called up with a Gateway computer that had 768 MB Ram, a Radeon 9600, and RAID 0 in it. Which is all fine, except the power supply was 250 Watts!!! Needless to say this guy had tons of problems with his computer from day 1.
023AD01("Child", "Evil");
Come again? What inventory? The only thing you could do at Gateway Stores was ordering your PC anyway. They only had some sample PCs to show off. Then again: Since when do have analysts the slightest clue about what they are talking ...
cragen
Distribution channels at retail without a lot of work. Large retail outlets like Costco. I suspect that Costco sells a lot of PCs. I don't know what E-Machines profitibility of late, but they started with a very lean infrastructure. Few people --the ceo/founder, a secretary and about 17 sales people-- and contract builds by KDS and ??? in Korea with drop shipping to the retail outlet directly.
Gateway could use some cash management skills and a method of being profitable. Retail is likely the only way in the near future they are going to get it since Dell, Tiger, IBM and HP aren't going way any time soon and seem much better run. The E-Machines model gives them that.
I'd say this is a hell of a lot better move than when NEC mergered with Packard Bell. That still makes me shudder.
Does anyone remember CompuAdd? They were a struggling mail order PC firm that opened stores all across the country.
Unlike Gateway they did stock a few machines but mostly they had to order them for you like Gateway.
When I first heard about Gateway opening stores I knew it was a big mistake. How could Gateway not learn from CompuAdd's failure? But that's exactly what happened.
Apples high margins may save them but don't be surprised if their stores are eventually closed. It's not a winning business model.
Man Holmes