Gateway 2000 Enhances Its Westward Expansion

Gateway 2000 Inc. said Monday that it is creating a new unit based in Irvine to bolster its ties with the dealers and distributors who sell computers to corporations.

The new unit, called Gateway Partners, will operate out of new offices the South Dakota computer maker is setting up in Irvine. The company will be hiring more staff but isn’t sure how many workers it will need, a spokeswoman said.

Last week, the company said it was expanding its California operations, creating Gateway Business in Irvine to focus on the business market and hiring 50 employees there. It also is opening an administrative headquarters in San Diego.

Monday’s unveiling of Gateway Partners comes as rivals are going the opposite way. They’re trying to rely less on so-called channels of dealers and resellers, adopting models more like Gateway’s and Dell Computer Corp.’s method of selling directly to users.

Gateway said it is creating Gateway Partners to sell to corporate customers, most of whom use resellers or distributors because they offer added services such as service and support, customization of hardware and software and integration of computers with other products.

Gateway and Dell have been more successful with their direct model because there is no intermediary marking up the price, allowing Gateway and Dell to pass along cost savings and get products to market quicker.

Compaq Computer Corp. has been trying to move to a more direct model but has run into snags as its inventory at dealers built up. The company was forced to slash prices to get rid of the products.

“Our relationship with the channel will be dramatically different,” said Michael Willcocks, vice president at Gateway Partners. “We don’t stuff the channel and, in fact, we don’t have any inventory in the channel.”

Gateway already sells some products with its channel partners, including the servers from its Advanced Logic Research unit in Irvine. Gateway bought that unit last year for $194 million.

Gateway won’t keep large amounts of products at resellers’ warehouses because such inventory declines in value about 1% a week, and Gateway would rather ship machines out two to five days after they are ordered.

“You can’t forecast accurately what the end-users want,” Willcocks said. He said enhancing the offerings of Gateway products through resellers and dealers makes it easier for businesses, government agencies and institutions to buy from Gateway.