Gateway Versus Apple

  • Posted: 26 August 2002 09:49 PM

    In a really bizarre move, Gateway is taking on Apple by releasing an all-in-one PC to compete with the iMac. Gateway is currently rated at junk status by the major rating firms and the company is chewing its way through what remains of its cash.

    Basically, the company has been on Dell’s lunch menu and its response is to try and take on Apple. IMHO this is the penultimate stupid move that will accelerate the company’s demise.

    Why? Because the company’s message is confusing – attempting to compete with Dell, Hp and others in the enterprise market and now coming after Apple in the consumer market. Gateway has now opened a two-front war with barely sufficient resources (at best) to compete on one front.

    I had sympathy for Gateway until now. The company is choking on its overpriced lease obligations for the Gateway Country Stores and is preparing to launch a very expensive media campaign to support its new machine.

    This is a really stupid business move that years from now may appear as content on business 101 curriculum CDs as an example of how not to revive a struggling business.

    The company was beginning to compete on price with Dell and others in the enterprise market and I thought the company had a chance to make it back. But this change of course speaks of desperation. It’s sad to see a once innovative company go out of business due to a spectacularly stupid decision.

         
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    Posted: 26 August 2002 11:28 PM #1

    Well said, DT. My thoughts almost exactly mirror yours on this issue, including the sympathetic feelings I had for Gateway.

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  • Posted: 26 August 2002 11:47 PM #2

    I’m not sure Gateway is directly trying to compete with Apple though.

    Gateway isn’t going to switch any current Apple customers so this would be targeted at ‘switchers.’ I doubt there are enough of them to make it worth their while.

    Maybe they are just trying to use the excitement already generated by Apple’s Ad campaigns (as well as the Mac/PC debates) to draw more attention to their new product. It might have the effect of adding momentum to their own ad campaign.

    Not that I mind… It implies that the iMac is the computer to beat in the consumer market.

    -Dan

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  • Posted: 27 August 2002 11:47 AM #3

    Anyone know how much stuff the iMac has that the Gateway doesn’t?  wink

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  • Posted: 27 August 2002 11:54 AM #4

    You mean “stuff” like a DVD burner?
    -Dan

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  • Posted: 27 August 2002 12:13 PM #5

    And the iApps, like iDVD and iMovie smile

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  • Posted: 27 August 2002 01:29 PM #6

    Hilarious

    What could Gateway possibly be thinking.  My favorite is their line “They are nearly the same, until you turn them on” or whatever.  Yeah, the Mac is way different alright.  Its better!  Go ahead and compare.  Go ahead!  Us Mac users aren’t going to stop you.

    Gateway’s ad campaign will backfire because it may cause people to compare for themselves.  Just doing this will garner more Mac users.

    What do they hope to gain?  Market share from people who would have otherwise bought iMacs?  Apples market share is already low, so Gateway sounds like its trying to squeeze blood from a rock.

    Anyway, my rant is meandering now.  But I thought this was very funny.  Go Gateway!

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  • Posted: 27 August 2002 02:05 PM #7

    A mjaor consumer push at this time is not wise considering the August drop in consumer sentiment. Consumers are not in the mood to buy PCs and the thought that big sales gains can be made from selling to people who might otherwise switch from PCs to Macs is ridiculous.

    Gateway has been bleeding market share and revenue. World-wide, Apple outsells Gateway and the Mac maker is closing in on surpassing Gateway’s US sales.

    Gateway can’t compete with Dell in the consumer space so they will attempt to take on Apple? There isn’t enough “switcher” share there to make it worth their while.

    Really poor business decision IMHO.

         
  • Posted: 27 August 2002 03:30 PM #8

    Interesting

    Was looking at specs from Gateways ridiculous “test” and noticed something interesting:  both computers had double the amount of RAM that they ship with in default configuration.  AND the “XL”, now called the “X” according to Gateway’s website, had a souped up 2.66 GHz processor as compared to the shipping 2.4 GHz processor.

    I bet OS X would like a little more RAM than they were giving it, too.  And its hard to burn DVDs on the Gateway.  ALSO: the hard drives on the Gateways were half the size as on the iMac.  Kind of important in an all-in-one machine.

    PDF page loading, system startup, Quake 3 and Javascript.  Wow those are great tests.  That is, if you constantly needing to read manuals to figure stuff out, having your computer crash on you, enjoy playing outdated games, and loading ridiculously phony web pages.

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    Posted: 27 August 2002 03:39 PM #9

    So, how about some devil’s advocate “good news” for consumers: Apple may have to be more competitive with the marketing/pricing/feature set of the iMac in response to the Gateway systems. Still, it’s a stupid fight to pick. Even if they can catch the potential “switcher” market from Apple, they can’t compete against the real root of the “switching”, MacOS X. The market they can get is pretty small, and Apple has enough economic clout to put the nail in Gateway’s coffin.

    Unfortunately, Apple might also try and take the easy way out, and try and sue Gateway’s pants off. It worked against the eMachines eOne system, and Gateway’s in much worse financial situation, making them an appealing target for litigation.  Unfortunately, it means Apple spends it’s money on lawyers, instead of on increased customer satisfaction.

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  • Posted: 27 August 2002 08:01 PM #10

    I’ve done a fair bit of cross-platform consulting over the past few years. Gateway fit nicely into what I’d call the “anything but Dell” category. Dell has good prices, but I’m not a fan of the company and IMHO to cut costs they have sacrificed a bit on quality, especially in their consumer level products. However, Dell is indeed tough to beat on price and one knows that HP and Dell will continue in business.

    The bottom line is I need to look at what’s best for my client, but I would often take a look at Gateway’s offerings to see how they would stack up in terms of price, features, etc. with HP and Dell before recommending a purchase for clients who either weren’t prepared to go Mac or just refused to consider Macs as an option.

    Mac users don’t work in a world of our own and many of us make purchasing decisions for Wintel products. This has pretty much destroyed any good will I harbored for Gateway. One of the things that worked against my recommending Gateway products has been the company’s tenuous financial and market position. I’m not going to recommend the purchase of a product from a company that I have serious concerns will not be around to fulfill an extended warranty service contract. I had thought the company was on the way back, carefully and diligently becoming more competitive on price and able to move to a positive cash flow position sometime over the next few quarters.

    Dell and HP can occasionally afford an expensive mistake, Gateway cannot. It looks to me like an act of desperation and I will now be moving Gateway off of my manufacturer list when I’m asked to make product recommendations.

    Why Gateway thinks Apple will be a less fierce competitor than Dell or HP is beyond me. To HP and Dell, Gateway is a company that has market share they’d like to have but they can work around it. Gateway has now put itself directly in Apple’s sights and is basically advertising that they want to be taken down. A really stupid move.

    If Wintel buyers have second thoughts about Gateway and its products, why do they think targeting Apple’s customers or Apple’s potential customers with a direct ad will bring better fortunes? This move makes little to no business sense. I’m sad to see a once innovative company go down this way.

         
  • Posted: 27 August 2002 09:13 PM #11

    Profile 4 vs. iMac 17" System Shootout

    I posted this in the original article feedback section, but thought it was worth repeating here:

    http://www.aapltalk.com/shootouts/imac_vs_gateway.html

    Bottom line: Yup, the high-end Profile 4 has much beefier hardware specs in most categories…

    But ooops! No DVD burner, crappy software, & worse video card.

    Plus, the performance comparisons were using OS X 10.1, not Jaguar 10.2 (which features a pretty hefty performance improvement).

    An excellent try by Gateway, but I don’t think Jobs & Co. will be sweating this particular offering too much.

    —BlueDjinn

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  • Posted: 27 August 2002 09:48 PM #12

    Re: Profile 4 vs. iMac 17" System Shootout

    [quote author=“BlueDjinn”]I posted this in the original article feedback section, but thought it was worth repeating here:

    http://www.aapltalk.com/shootouts/imac_vs_gateway.html

    Bottom line: Yup, the high-end Profile 4 has much beefier hardware specs in most categories…

    But ooops! No DVD burner, crappy software, & worse video card.

    Plus, the performance comparisons were using OS X 10.1, not Jaguar 10.2 (which features a pretty hefty performance improvement).

    An excellent try by Gateway, but I don’t think Jobs & Co. will be sweating this particular offering too much.

    —BlueDjinn

    I think these are good points. But the mistake Gateway has made is taking their attention away from holding their own against Dell, HP and the white box makers. They are diverting hefty resources to enter a market in which they just won’t win.

    If they stacked their all-in-one against Dell or HP and showed the benefits of an all-in-one design, they might have made some head way. At least they would have made some head way in the market where they need to keep their business.

    Unless Gateway is losing significant numbers of customers to Apple, this approach does not make business sense.

    It’s good bye time for the troubled company.

         
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    Posted: 27 August 2002 11:32 PM #13

    [quote author=“KitsuneStudios”]
    Unfortunately, Apple might also try and take the easy way out, and try and sue Gateway’s pants off. It worked against the eMachines eOne system, and Gateway’s in much worse financial situation, making them an appealing target for litigation.  Unfortunately, it means Apple spends it’s money on lawyers, instead of on increased customer satisfaction.

    I know one of Apple’s former directors of global litigation.  If the current person in that slot is anything like the one I know, this is NOTa person you want after your butt (or your bank account) in a courtroom.  Darn near anybody who walks in on Gateway’s side will be out-gunned from the beginning and might as well just open the checkbook.

         
  • Posted: 28 August 2002 09:25 AM #14

    Interesting

    This article is funny, well sadly funny.

    http://www.debris.com/journal/508

    Anyone know where I can see these spots on the internet?  Haven’t been able to find them anywhere.

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  • Posted: 28 August 2002 09:45 AM #15

    poopy pants..

    when I read a synopsis of this Gateway ad, I was shocked that their agency had anything to do with this type of ad.

    makes them seem like a little kid throwing a tantrum, and as a last resort, is picking up dirt clods and throwing them..

    sad to see it..