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Gateway taking preorders for PCs with XP

The PC maker starts taking preorders for computers running Windows XP, as it looks to get a jump on its competitors.

Gateway on Tuesday started taking preorders for PCs with Windows XP, as the company looks to get a jump on competitors.

The PC maker will begin shipping the systems to customers in late September, Gateway spokesman Brad Williams said. Although Williams would not give an official ship date, PC makers earlier had pegged Sept. 24 as the date when Microsoft said they could begin selling computers with the Windows XP operating system.

The OS is not expected to appear as a standalone product on store shelves until Oct. 25.

San Diego-based Gateway hopes to use its 296 Country stores across the United States to help drive sales of Windows XP and thus its own computers. On Tuesday, the company began offering in-store demonstrations of the new OS, but not of the PCs that will run it.

"It's the same demo that Microsoft has on its Web site," Williams said.

Gateway estimates that about 85 percent of the U.S. population is within driving distance of one of its retail stores. Williams would not disclose details but said the stores would be important tools in Gateway's marketing strategy for Windows XP.

Gateway's preorder strategy underscores the weight PC companies are placing on Windows XP for boosting sagging sales. Industrywide PC shipments were down about 8.5 percent in the second quarter, according to market researcher IDC.

Analysts had mixed reactions to Gateway's expectation that XP will help improve sales.

"I do see the Country stores as an advantage because Gateway can allow people to touch and feel it, which is always a good thing before they purchase," ARS analyst Toni Duboise said. She described the preorder as "a good marketing ploy."

The Country stores strategy could be the only differentiating card for Gateway to play, Duboise added. "But I still don't think people are going to be lining up outside the door to buy Windows XP."

Technology Business Research analyst Brooks Gray agreed.

"I don't think that XP is a viable driver for an increase in consumer PC purchases," Gray said. "The stores provide Gateway with a local branding advantage, but I believe consumers are more educated about technology and will do their research on tracking down the best value."

Although the company tries to be competitive, Gray said, "right now Gateway has not been offering the best value. The best value has been coming from Dell, if you look at price and service-quality levels."

Gateway needs to use every resource available to get consumers into stores to buy XP-based computers. The PC maker last week disclosed a massive reorganization that will trim up to 25 percent of the work force. Gateway also predicted a third-quarter loss.

Jim Allchin, Microsoft's group vice president for Windows, has predicted the new operating system will help invigorate PC sales at least by next year.

Hewlett-Packard CEO Carly Fiorina has said she believes the new operating system will be important for holiday sales this year.

Late Monday, HP agreed to buy Compaq Computer in a $25 billion deal. The deal underscores "the troubles both companies have had recently" selling PCs in "this very competitive market," noted Context analyst Jeremy Davies.

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