Gateway expands PC configuration options

Gateway plans to overhaul its consumer PC lineup Thursday with new configurable models that will be sold exclusively through the company’s Web site and call centers.

The 7200, 5200, and 3200 series PCs appeared on Gateway’s Web site on Wednesday. They will replace the 700, 500, and 300 series Gateway PCs that had been available on the company’s Web site.

Gateway dramatically expanded the number of options that buyers will have when configuring the new PCs, said company spokeswoman Kelly Odle. Starting on Thursday, customers will have the ability to customize several different parts of their system, including the processor, memory and hard drive size.

Just as the current lineup, the new PCs will have three models within each series. However, the options on the older PCs were limited to a few accessories such as monitors, printers, or application software.

Gateway completed its acquisition of eMachines six months ago in March, but the combined company looks much more like eMachines than the old Gateway, and has even moved its headquarters to Irvine, California, where eMachines was located.

There have been numerous changes in the way the company does business, such as the closure of the Gateway retail store network and new partnerships with retailers such as Best Buy Co. and CompUSA. New Chief Executive Officer Wayne Inouye has instilled an eMachines-like culture of expense reductions and product simplification. Gateway has laid off thousands of workers, backed off its consumer electronics strategy, and moved to standardize its PCs on a limited number of designs to reduce component costs.

Despite that, Gateway is still committed to direct sales as an important part of its distribution strategy, Odle said. Direct sales allow PC vendors to offer their products at lower prices or at higher margins since distributors and retailers don’t get a cut of the sale. This has allowed Dell to undercut its rivals in the PC business on price while maintaining healthy margins, something that almost drove the old Gateway away from PCs in favor of higher-margin consumer electronics products.

Another important part of the new Gateway that Inouye brought from eMachines is a value equation method of determining what configurations are the starting points for direct sales, said Rick Schwartz, senior product manager at Gateway. Under the old system, Gateway would use a process of trial and error to determine what configurations made the most sense on its Web site, he said.

Now product managers take advantage of data complied by eMachines to determine what configurations appeal most to consumers, Schwartz said. This is an evolving process that will likely keep the starting configurations on Gateway’s Web site changing week to week, he said.

The price of the new low-end Gateway 3200S PC reflects that newly found discipline, coming in at just $499.99 with a 17-inch CRT (cathode ray tube) monitor. The system features a Celeron D 330 processor from Intel Corp. at 2.66GHz, 256M bytes of PC2700 (333MHz) DDR (double data rate) SDRAM (synchronous dynamic RAM), an 80G-byte hard drive and a CD-ROM drive.

Dell’s entry-level Dimension 2400 costs $469 with a 17-inch monitor after a $50 rebate, but comes with a slower processor and a smaller hard drive. Hewlett-Packard’s Compaq SR1000Z series PCs are the cheapest systems available on its Web site, starting at $323.99, but that price does not include a display. A 17-inch CRT monitor is available for $99 on HP’s Web site.

The new Gateway 3200 series features the low-end 3200S, the midrange 3250S, and the high-end 3200XL PC. Each series uses the same branding strategy to differentiate the PCs, but each PC can be configured with different components or displays.

The new Gateway 5200S comes with Intel’s Pentium 4 520 processor at 2.8GHz, 512M bytes of PC3200 (400MHz) DDR SDRAM, an 80G-byte hard drive, a 17-inch CRT monitor, and a CD-RW/DVD-ROM drive for $849.99.

The new Gateway 7200S comes with the Pentium 4 540 processor at 3.2GHz, 512M bytes of PC3200 DDR SDRAM, a 160G-byte hard drive, a 15-inch LCD (liquid crystal display), and a DVD+/-RW drive for $1,249.99. The entire 7200 series is based on the new BTX (balanced technology extended) motherboard design promoted by Intel and used by Gateway in the 700GR PC that was launched in August.