Waitt to step down as CEO of Gateway
Published: 09 Dec 1999 10:40 GMT
The PC industry just lost one of its most creative lights, at a time when his vision might have helped drive it forward.
Ted Waitt, who stepped aside as CEO of Gateway Wednesday, was a billionaire businessman with a ponytail, a risk-taker who frequently broke with convention. And in the process, he changed the way PCs were marketed, helped legitimise direct sales of high-tech products and built a multibillion-dollar PC maker far from Silicon anywhere.
Waitt will remain chairman of the company he founded in South Dakota in 1985. But effective 1 January, Gateway President Jeff Weitzen will add the CEO role to his responsibilities.
While the PC business has matured greatly during Waitt's tenure, the whole realm of information appliances appears poised to explode. And Waitt might have served as a point person for where they should go. After all, Gateway marketed the Destination, a PC entertainment system for the living room, years before anyone in the industry took the living room seriously, and also sold one of the first legitimate subnotebooks. The company also shunned the normal beige box design common to PCs of the time, using soft curves in its design.
Waitt's biggest contribution to the industry probably came in changing the way PCs were marketed. Under his stewardship, Gateway used cows and quirky, folksy ads to market PCs. "He's probably the guy who invented the bundle," said Stephen A. Dukker, a long-time executive in the PC business who is currently president and CEO of eMachines "Pre-Gateway, everyone advertised erector sets -- this CPU, this monitor. (Waitt) recognised that people were smart enough to recognise the value of a full system."
Dukker called Waitt's move out of the day-to-day PC biz "sad for the industry". "He's been one of the more creative lights," Dukker said. "He had a hand in redefining the way the PC business worked." "He's been a very driven and creative and motivated executive. What he did with Gateway is phenomenal," Dukker added.
Along with Michael Dell, the 36-year-old Waitt is credited with helping to legitimise the direct-PC business. The 1990s might as well be the "Direct Decade," as direct sales now make up about 32 percent of overall PC sales in the US, according to IDC. "With those two (Gateway and Dell) battling it out, they added legitimacy to the direct market and they pushed each other to excel," said John Dunkle, president of Workgroup Strategic Services. In an interview, Michael Dell told ZDNN that Waitt was "a good competitor", but suggested that the verdict on Dell's rivalry with Gateway rivalry was already in.
"Our business is larger than theirs, it's profitable and growing three times faster," he said. Gateway also posted profits in its most recent fiscal year.
Despite another member of the old guard departing from the scene, Dell said he had no plans to follow his erstwhile competitor into the sunset. "I might have paused if he was younger than I am. But I'm 34," he said. "I have another 20 or 30 years as CEO, and don't plan to slow down at all."
Clever marketing, and execution, made Waitt a billionaire and helped Gateway generate $7.5bn (£4.65bn) in revenue in 1998. Gateway sits in the top five PC makers both in the US and worldwide, which one analyst called remarkable for a company that does most of its business in the US. "It's difficult to be in the top five worldwide without much of a global presence," said Martin Reynolds, an analyst at Dataquest.
Reynolds speculated that Waitt was leaving the day-to-day behind because there was little else for him to accomplish at Gateway. "Waitt leaves at the top. I'm sure he's thinking it's time for a change in focus. He's a relatively young man and he's spent a long time in this industry," Reynolds said. He added that "Gateway's doing just fine at the moment, so it's as good a time as any to (step aside)."
Gateway has expanded its business model, opening some retail stores (non-direct sales make up about six percent of its business), developing the Your:Ware consumer leasing program and offering ISP services, as well.
Most analysts expect Waitt will not totally disengage from the company, despite his other projects, a la Steve Jobs, who runs Apple Computer and Pixar Animation Systems. "I'd be absolutely surprised if he doesn't keep a very strong role. I think it just frees him up to do other things," said Tim Bajarin, president of Creative Strategies.
Waitt's decision was not unexpected. Speculation had started when he moved Gateway's headquarters from North Sioux City, South Dakota, to San Diego, California, in June 1998. In recent years, Waitt has taken a less active role in managing the company's daily operations. Indeed, in a statement, Waitt described Weitzen's appointment as a formalisation of the roles the two men have essentially played for the last year.
Neither Waitt nor Weitzen were available for comment, but a Gateway spokesman said Waitt will keep active. Waitt, perhaps the world's most visible pony-tailed billionaire, intends to remain actively involved in running Gateway's board and advising Weitzen. He also plans to spend more time on the Waitt Family Foundation and will spend more time looking for investments for a fund he's started.
Still, one former Gateway executive thinks the company will miss Waitt as CEO. "He was loved. The staff that knew Ted had great affection for him, and this will be a blow to many of the older employees," said David Prais, president of software portal Chumbo.com, who worked three years as a senior manager at Gateway. Prais said that in his opinion, "Ted Waitt's impact in terms of giving consumers great products at good prices is second to none."
Weitzen, who spent 18 years working for AT&T, was brought in by Gateway in January 1998 to bone up the company's operations. Even as Gateway rocketed to fame and fortune, the company was periodically nagged by inventory and product planning problems. "When Jeff joined Gateway two years ago, we were in the very early stages of developing what's become known as our 'beyond the box' strategy," Waitt said in the statement.
"As a world-class convergence player, Jeff stepped in and brought a whole new level of vision, focus and refinement to that strategy, then led the management team to execute against it."
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