Gateway's Plan To Stay RelevantGateway's Plan To Stay Relevant

Commercial business is "an absolutely integral part of a resurgent growth of Gateway," Smith says. "We have proven we can get more margin out of the business, and now the question is where to get more volume."

Shortly after the merger, Inouye and Greg Memo, senior VP of platform development and operations, began transitioning the company to the eMachines supply chain, meeting with Asian manufactures and suppliers to deliver the company's new message.

"The key thing in this business is you want to be relevant to your suppliers," Memo says. A number of them were trying to decide if they wanted to keep Gateway as a customer. "We had to show them we had a strategy to move forward and become profitable." Memo, who held a similar position with eMachines before the merger, now meets in person with key partners at least once a quarter.

Although Gateway uses common platforms across much of its business and consumer product line, it will do what's necessary to meet the needs of its commercial customers, Memo says. That included the creation of its Profile 5.5 series of desktop PCs that are used only in the business market.

Gateway ranked fourth in an information survey of PC vendors late last year, tied with white-box vendors and behind Dell, IBM, and HP in overall rankings of desktop vendors. It lagged behind those same vendors and Toshiba in overall rankings of notebook vendors. So it's not unexpected that some customers have been surprised by the company's rise to the top of their own lists.

Jim Rice, CIO of ECRM Corp., a conferencing service provider that primarily hosts events to match consumer packaged-goods and retail companies, didn't expect Gateway's tablet computer to lead the pack of about a half dozen products he was evaluating last year.

ECRM wanted to use tablet PCs to replace hard copies of meeting agendas, promotional material, and other items that it delivers to the product manufacturers and retailers who attend its conferences. The company so far has ordered 220 tablets from Gateway and provides one to each conference participant; wireless connections update the tablets with all pertinent information.

"Gateway was the last company I looked at and that was in frustration," Rice says. But the vendor's superior price and performance, as well as its service, changed his opinion of Gateway "as a consumer, end-user type of company," Rice says.

Some midsize companies say they've long felt confident in Gateway as a main systems vendor. Tasty Baking Co., a mid-Atlantic provider of snack cakes and other baked goods, has used Gateway desktops for several years. Last year the $250 million-a-year company decided to purchase Gateway servers.

"We were transitioning away from the more expensive Unix-based products to Windows-based systems," says Autumn Bayles, CIO of Tasty Baking. "Gateway may not be top of mind [for servers], but I was looking at options and knew I'd had a great experience with Gateway customer service for desktops."

Out of 30 servers in its data center, Tasty Baking now has about 25 Gateway systems, she says.

Still, significant growth for Gateway's commercial business will likely take some time as many potential users and other observers remain skeptical about the company's latest change in direction, IDC's Kay says.

"It seems like they've made a half dozen changes in direction over the past few years," Kay says. "The dust needs to settle. Gateway needs to put out a consistent message for a while before companies can be convinced that they know who they are now."