Gateway Parades New Products

Gateway wrapped up its recent push into the consumer electronics market during a launch event Tuesday, introducing products ranging from a hard drive-based music player to LCD televisions.

The Poway, California, company has also completed the redesign of 190 Gateway stores around the company's new consumer electronics focus, said Ted Waitt, chairman and chief executive officer, during a Webcast of the event from Gateway's Union Square store in New York.

"We now have a much broader array of products than we've ever had before, and we have a unique environment to showcase them," Waitt said.

Gateway's transformation over the past year has come as part of a broader PC industry move into the consumer electronics world. Consumer electronics products such as digital music players, digital cameras, and televisions are growing faster than the PC market, and are new enough on the market to command the higher prices and margins sought by manufacturing companies.

The PC market slump of the last few years had a pronounced effect on Gateway, which lost revenue and market share to vendors such as Dell and Hewlett-Packard. The company has not posted a profit in several quarters.

Making a Move

In May, Gateway outlined its plan to become a consumer electronics vendor as well as a supplier of enterprise IT hardware such as servers and storage products. While developing these new revenue sources, the company also aggressively cut costs through layoffs, store closings, and outsourced manufacturing.

By the end of the year, the company will have launched 100 new products in 20 new categories in 2003, a Gateway spokesperson said. Most of the launches have gone smoothly, but a planned launch of a personal digital assistant in August was delayed beyond the fourth quarter.

Gateway is unique among its competitors in both the PC and consumer electronics business in that it maintains its own retail stores throughout the United States. Those stores have been redesigned to allow Gateway salespeople to demonstrate their products for customers, such as taking a digital picture with a Gateway camera, loading it onto a Gateway Media Center PC, and printing that image on one of the printers from other vendors sold by Gateway, Waitt said.

Product Plans

At the launch event, Gateway announced several new products:

The Gateway DMP-X20 music player will launch with a 20GB hard drive for $299, Waitt said. It measures 3.9 inches high by 2.6 inches deep by 0.83 inches thick and weighs 7.7 ounces. Gateway is taking preorders as of Tuesday, and the device will be available on November 26.

Apple Computer's 20GB IPod music player is a little longer, but weighs 5.6 ounces and costs $399. Dell's 20GB DJ 20 music player costs $299 after an instant $30 rebate and weighs 7.6 ounces.

Gateway also introduced two digital cameras during Tuesday's event. The 2-megapixel DC-T23 costs $129, and the 4.1-megapixel DC-M42 costs $249. The T23 is designed as a pocket camera, measuring 3.4 inches wide by 1.6 inches high by 1.2 inches thick, while the M42 allows more-serious photographers to capture quality images, Waitt said. The cameras are available immediately.

New PCs

The Gateway 901 Media Center PC is designed to fit into a home entertainment center, while still providing all the performance of a normal PC with a wireless keyboard and mouse. It will cost $999 when it is released at the end of November, Waitt said. Information about the 901's specifications was not immediately available.

Gateway also introduced its own convertible tablet PC. (The company was selling Motion Computing's slate tablet PC device under its own brand name.) The Gateway M275X uses a 1.4-GHz Pentium M processor, 256MB of DDR SDRAM, a 40GB hard drive, a DVD-ROM/CD-RW drive, and an 802.11b wireless chip at a starting price of $1799. The more expensive M275XL with a faster processor, more memory, and more storage space will also be available along with the M275X starting on November 13.

Two multimedia notebooks were announced: a 17-inch wide-screen model and a 15.4-inch wide-screen notebook. The 17-inch Gateway 675X comes with a 3-GHz Intel Pentium 4 processor with hyperthreading, 512MB of DDR SDRAM, a 60GB hard drive, a DVD-R/-RW/CD-RW drive, 64MB of video memory, and an 802.11g wireless chip for $1999. The 15.4-inch M505X comes with a 1.4-GHz Pentium M processor, 512MB of DDR SDRAM, a 40GB hard drive, a DVD-ROM/CD-RW drive, and an 802.11b wireless chip for $1599. A more expensive configuration of each notebook will also be available.

The 675 is available immediately, and the M505 will be available on November 13.

Last, But Not Least

To complete the digital home, Gateway also announced a $349 DVD+RW/+R external recorder, a $1499 23-inch LCD television, a $2299 26-inch LCD TV, and home networking products.

Business customers were not left out of Tuesday's product announcements. Gateway will provide more details about two new storage products at Comdex next week in Las Vegas, including a device that combines the Serial ATA interface with JBOD (just a bunch of disks) technology and the company's first NAS (networked-attached storage) device, Waitt said.

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