UPDATE - Gateway unveils consumer electronics products
Tuesday November 11, 1:08 pm ET
By Caroline Humer
(Adds data storage push in paragraph 2, analyst comment)
NEW YORK, Nov 11 (Reuters) - Gateway Inc. (NYSE:GTW - News), the personal computer company that is diving into consumer electronics, on Tuesday introduced a digital music player, flat-panel televisions, and a DVD recorder as it gears up for the important holiday season.
ADVERTISEMENT
The Poway, California, company also said that it plans to break into data storage for businesses by offering both direct-attached and networked storage products. It will launch those products next week.
"We feel that we're a completely new Gateway," Chief Executive Officer Ted Waitt said during the product launch in New York, surrounded by plasma television screens and the giant cow-patterned boxes that are Gateway's calling card.
The launch was held in one of its refurbished stores, which the company says are an integral part of its strategy to sell consumer electronics.
"It's pretty crucial to see us start getting more traction since we've invested pretty significantly in remodeling and refurbishing the stores," Waitt said in an interview ahead of the launch.
Gateway made an early push in an increasingly crowded field of PC makers targeting the consumer electronics market in an effort to offset weak corporate demand for PCs. The top two PC makers, Dell Inc. (NasdaqNM:DELL - News) and Hewlett-Packard Co. (NYSE:HPQ - News), have also launched a slew of gadgets.
Apple Computer Inc. (NasdaqNM:AAPL - News), popular with schools and consumers for its cutting edge design, is also a competitor.
Gateway, which has posted eleven consecutive quarters of losses, has redone nearly all of its 190 stores in the past few months to make them more user-friendly. The stores have been highly criticized by some analysts, who say that they are too costly and weigh on profits.
Gateway is betting the stores will help its consumer electronics business grow rapidly in the next few months.
"You're going to see our consumer business essentially double from this quarter to next quarter," Waitt said.
"Last holiday season we had one plasma TV, a lot of PCs and some third-party cameras. As we get into this holiday season we'll have close to 100 new products."
But Gateway needs to be able to execute its plans to grow, according to Stephen Baker, at market researcher NPD Group.
"I think that's the question. There isn't any question they are doing the right stuff," Baker said, pointing to their varied products.
So far, Dell, which used its large volumes to cut prices and take share from Gateway in the personal computer market, is not threatening Gateway, Baker said.
"Dell hasn't been particularly aggressive. Some products don't play to their core competencies. People want to see the TV and they do want to hear the audio (before they buy)," he said.
Gateway's digital music player has a 20-gigabyte hard drive, which can store thousands of songs. It sells for $299, the same price as Dell's comparable player after a rebate. Apple's iPod 20-gigabyte machine sells for $399.
Gateway also said it added a 23-inch and 26-inch flat-panel television for $1,499 and $2,299 respectively, bringing the number of television models it offers to 12.
The company also introduced two notebook computers and a tablet PC among other items.
