End of an era: Gateway stops selling PCs directly to customers

Computer maker Gateway has moved entirely to an indirect sales model in which it will stop selling PCs online through its own Web site, only offering PCs through retail channels.

After being founded in 1985, Gateway pioneered direct-to-customer computer sales, and enjoyed big success until the dot-com era began to erode. It quickly lost ground to competitors like Dell and HP. The Gateway brand, which is now a subsidiary of Acer, launched its own stores in the late 1990s and early 2000s, but the retail channel was not receptive of the stores.

The combination of making sales through its own Web site and retail partners was made after Gateway shut down its retail stores. Even without the benefit of stores, Gateway was extremely successful selling products through its Web site and phone service directly to consumers.

But selling products directly to consumers has become less popular in the computer industry, although Dell and Apple are two examples of exceptions. Apple, however, has seen sales surge after launching its own retail outlets.

Considering Acer's reliance on using retail partners to sell its PCs, this announcement was long expected and not too surprising. Acer uses an indirect sales model to sell all of its products across the world, and said its strategy has been "successful."

Gateway's sales shift away from direct sales has led to staff cuts that are taking place in small numbers after internal audits and evaluations of each department.

"Although you won't be able to purchase from us directly, Gateway.com is still your number one resource for information on the latest Gateway products, purchase methods and locations, along with support for previous purchases," the company said last week.

Consumers had their last chance to purchase Gateway products directly through Gateway's Web site on Saturday, with a quick look confirming that the 1-800-GATEWAY and online store have been removed. After viewing a certain PC or notebook, the bottom of each product's column has an "Available at" section that lists where consumers can make their purchase.

Gateway will feature its products at stores including Best Buy, Fry's, Circuit City, CompUSA, Cosco, OfficeMax, Office Depot, Tiger Direct, newegg and Wal-Mart.