Can Gateway rise again?
Published: 28 Jul 2004 11:30 BST
Can Wayne Inouye succeed where Ted Waitt could not?
That's the question making the rounds on both Wall Street and Main Street these days, as Inouye attempts to revive the momentum at this former high-flying computer maker.
Inouye became Gateway's chief executive in March, after Gateway's acquisition of eMachines. It was an interesting match, bringing together two corporate cultures from two vastly separate geographies: Gateway hails from the plains of South Dakota, while eMachines got its start in Southern California. The company will make its new headquarters in Irvine, California.
Inouye's first order of business was to cut excess costs and refocus the combined company's businesses. He has since ordered the closing of Gateway's 188 retail stores, a perennial money-losing operation that failed to meet the original lofty expectations. Gateway has since inked an agreement with Best Buy to carry Gateway's PCs, one of a series of retail partnerships that Inouye intends to pursue as he seeks to extend the company's nationwide and worldwide coverage.
Inouye also plans to temper Gateway's push into consumer electronics. The company garnered lots of headlines when it began selling consumer products such as plasma TVs in 2002. But the incremental revenue gain has failed to translate into big profit, according to Inouye. While he's not opposed to delivering what he calls "convergence" consumer electronics devices that either work with or resemble a PC, he says he wants to stick with what Gateway knows best: PCs.
CNET News.com recently sat down with Inouye in one of his first interviews since becoming chief executive.
Q: How are you going to compete against Dell, which has lower costs, and HP, which spends more on research and development?
A: I plan to create a cost structure that is lower. That's going to take some time -- it doesn't happen overnight. But it will happen fairly quickly.
I think it is very important to understand the competency of your competitors and what they're good at. What we are really trying to focus on is what's going to get our customers -- or potential customers -- to buy from us. So if that requires R&D, then we will spend money on R&D. But in the short and moderate terms, research and development are best left with our key component suppliers.
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