Gateway to Stop Selling PCs Through Web Site

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Gateway on Friday said it would stop selling PCs through its Web site, instead focusing on selling PCs through third-party stores and other online retailers.

Gateway has been selling PCs through partner retail stores since 2004, but it is now cutting direct online sales to consumers in order to cut costs and align its business model with parent company Acer, the company said. Acer last year acquired Gateway for US$710 million in an effort to boost its consumer presence in North America.

The change has resulted in some staff cuts, said Lisa Emard, a Gateway spokeswoman. "These reductions have been happening in small waves as the company has methodically evaluated each department and function," she said.

The transition away from direct sales is happening over the upcoming weekend, Emard said. Consumers will be able to purchase products off Gateway's Web site until Saturday evening.

The change could help Gateway better compete with rivals Hewlett-Packard and Dell, said David Daoud, research manager at IDC. Also, since the indirect model has worked well for Acer, it may be hoping that focusing on the same model can help boost Gateway sales.

Daoud suggested that the decision to kill off Gateway's online sales could mean that Acer may replace some Gateway brands with its own.

Some of Gateway's brands, like eMachines, which has a strong consumer presence, may conflict with Acer's offerings, Daoud said. By getting rid of Gateway's online sales and potentially in the future some of the Gateway brands, Acer may be simply trying to consolidate the brands, which could increase Acer brand awareness, Daoud said.

However, Emard said that Acer is focusing different brands on different sectors, and all of Gateway's brands will continue to be offered.

Acer offers four brands worldwide -- Acer, eMachines, Gateway and Packard-Bell -- with Gateway products currently available through retailers in Japan, China, Mexico, Canada and the U.S., Emard said.

"While there is indeed some crossover today, you're going to see Acer moving upstream with its product line and offering more high-performance products featuring advanced technology," Emard said.

Since the acquisition, Gateway has helped Acer boost its U.S. presence, where it was running neck and neck with Apple as the third-largest PC retailer. The combined company sold 1.3 million units, a 7.8 percent market share and a 49.9 percent increase over last year's third quarter.

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