After years of battling against these giants head-on, Novell, Gateway and Sun have changed how they attack their rivals, preferring assaults against their rivals' flanks as a way of competing. This approach has produced some of the most innovative strategies Sun, Gateway and Novell have come up with in years.
Take Gateway, for example. Waitt believes a price war with Dell is pointless. So, rather than try to be the lowest-cost, most efficient producer of PCs, the company is embarking on a new, multipronged strategy to beat Dell. It revolves around being first to market with aggressively priced devices, including flat-screen TVs for the home--where margins are often twice what they are in PCs for businesses--and building a reliable, loyal base of partners to take PCs to places that Dell does not effectively reach, namely small to midsize corporate customers.
To improve his chances of success, Waitt has made a ton of moves internally. To address operational issues, Waitt brought in new management, including former IBM vice president Jocelyne Attal, who now serves as executive vice president of Gateway Professional's business unit, and former Toshiba America president Joe Formichelli, who serves as executive vice president of operations. Waitt also pushed into new Gateway technology categories. Although its TVs grab all the headlines--Gateway is now among the largest sellers of flat-screen TVs in the country--the company's new alliance with Hitachi Data Systems, which will result in new SAN products, demonstrates how Gateway wants to be more than a mere PC supplier to businesses. That's winning fans among partners, who Waitt and his reseller management team believe could one day account for half of Gateway's business.
"There's no holy war or religion here about being a direct company," says Errett Kroeter, Gateway's director of channel programs. A former IBM channel manager, he was recently brought in to help launch Gateway's new ProNet channel program, which currently has 900 partners on board. Most are uncommitted at best, though Gateway wants to change that. The new program offers competitive benefits and an alternative value proposition.
Since ProNet was unveiled, Gateway's sales at IT Group, a networking consultant for SMB customers, have improved 20 percent to 30 percent. "Before ProNet, Gateway was more reactive, relying on SPs to create more market share for them; now they're actively positioning us with leads and new marketing materials," says George Phipps, vice president of sales and business development at the Los Angeles company.
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