Gateway Rolls Out Hardware, Recruits VARs

By Jacqueline Emigh  |  Posted 04-05-2005
Gateway this week rolled out a new two-processor server and wide-screen laptop PCs, at the same time actively trying to recruit more VARs to sell to SMBs. But some resellers say low-priced hardware alone won't be enough to sway them to work with someone they view as a longtime competitor to the channel.

Gateway Inc., well known for its direct-sales approach, has now paid $5,000 to the OPDA (Office Product Dealers Association) to talk up its newly unveiled M680C laptop, along with its ProNet resellers program, at an April 28 meeting in Las Vegas, said Darren McBride, president of reseller Sierra Computers Ltd.

In addition to the M680C laptop, a 17-inch wide-screen laptop priced starting at $1,399.99, the vendor this week also announced the Gateway 9415, an Intel 64-bit Xeon-based two-processor server with RAID 5 support, priced at $1,199 and up.

"It's going to be a tough sell for Gateway, though, because Gateway's been cutting out the channel for so long," McBride told Channel Insider.

"[But] resellers are Gateway's key to the small business market. Gateway can do fine on its own with medium and large businesses—yet without us, they're just not going to get into the market of 50 seats or smaller."

Some other VARs echoed similar sentiments about Gateway. "They've never been among my favorite people. They've never wanted us before. But I've been watching Gateway [retail] stores close down, and I think Gateway could benefit from people like us," said Bob Parsons, president of Automated Office Solutions.

But some VARs also indicated that they might be willing to change their minds, if Gateway shapes a reseller program that will meet their needs. In interviews with The Channel Insider, resellers mentioned wish list items ranging from double-digit margins to high-quality tech support, effective marketing campaigns, and products available exclusively through the channel.

Beyond Gateway's scheduled appearance at OPDA later this month, Gateway has been romancing some resellers through its regional sales reps, according to McBride. The OPDA, a nationwide consortium of about 35 regional VARs, represents total sales that some estimate at $300 million.

McBride said that, meanwhile, Sierra has been approached by Gateway to "fill in the gaps" of its current lineup with the new M680 and other Gateway laptops, "all-in-one" machines, and wireless touch-pads, especially for sales in the medical market.

The M680 is a 17-inch wide-screen mobile workstation based on the Intel 915 chipset. The laptop's Pentium M processors support 533 MHz front-side bus and fast Dual Channel DDR2 memory, expandable to 2GB.

Other features of the M680 include dedicated ATI Mobility Radeon X700 PCI Express graphics with up to 128MB of video memory; hard drives up to 7200 rpm; and Dual Layer Multiformat DVD-RW drives, according to Gateway officials.

Gateway has also launched the M360, a laptop with a 15.4-inch-wide display, priced beginning at $849.99.

Gateway knows that Sierra already has existing relationships in the desktop and server spaces, according to McBride. "I hadn't heard anything [before this week] about the 9415 server. But [as it turns out], the pricing is really low," he said.

Still, based on the specifications of the 9415, McBride doesn't find a compelling reason to start selling the new server—unless, perhaps, Gateway decides to give resellers margins of at least 10 percent.

Supporting up to two 64-bit Xeon processors, the Gateway 9415 server comes in a 1.75-inch-high chassis supporting dual redundant power supplies and up to three hot-swappable disk drives for RAID 5 storage. In conjunction with the 9415's E7520 chipset, the processors provide EM64T (Extended Memory 64-Bit Technology), a PCI Express bus architecture, and DDR2 memory.

Another reseller, Parsons, said he also might find double-digit margins an attractive-enough draw. "We're getting from 2 to 12 percent through HP [Hewlett-Packard Company]'s Smart Buy Program. But it'd be great if we could closer to 12 percent [from Gateway]," he said.

For Parsons, other possible lures toward Gateway might include tech support and marketing assistance.

"If my price from Tech Data turns out to be $200 or $300 above what's available on the Web, that doesn't make me look good to customers. They want to know why [my price] is 30 percent higher. But if I can get them really good tech support, that's a help. I've generally been under the impression that Gateway's tech support and quality control weren't that great. But this comes from the point of view of someone who hasn't been working with Gateway," he acknowledged.

"I might also be interested if [Gateway] has mechanisms for working with us to generate opportunities. But I hope these opportunities [aren't along the lines of], 'If it's one or two machines, Bob, you can have it—but if it's 500 machines, we'll take it direct.'"

Gateway's national advertising campaigns might possibly help spur sales, too, according to Parsons. "I've seen those [Gateway] ads with the guys running across the field, and I don't know how effective they are. But the last [commercials] I've seen from Dell [Computer Corp.] are the ones from several years ago about 'Yeah, I'm getting a Dell, dude.'"

But some VARs said they'll never sign on with Gateway, regardless of what moves Gateway might come up with around products, pricing or reseller programs.

Heartland Technology Solutions, for example, is almost exclusively a Hewlett-Packard Co. shop, according to Jane Cape, a partner with the VAR.

"Trying to win on price is never the way to go—especially today, when everyone's prices keep getting lower. If we went with Gateway, we might end up competing with them on the Web. We have a lot of familiarity with HP, and we're service authorized. It would take a lot to induce us to switch," said Cape.