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Gateway courts customers with computer tournament

Following a string of recent promotions for the retail outlets, the PC maker next month will hold what it says is the largest-ever computer game tournament.

Are you a winner?

That's what Gateway wants to know, as the San Diego-based PC maker looks for new ways to draw business to its Country Stores.

Following a string of recent promotions for the retail outlets, Gateway next month will hold what it says is the largest-ever computer game tournament.

Gateway will hold the tournament the weekends of Nov. 4-5 and Nov. 11-12 in 320 stores in North America. Intel and Microsoft are partners in the contest, which is being organized by the Cyberathlete Professional League. Creative Labs, Logitech WingMan Gaming and Nvidia are the event's other sponsors.

While winners will walk away with more than $300,000 in combined prizes, the real champion may be Gateway, said Technology Business Research analyst Brooks Gray.

"Gateway continues to come up with creative marketing to lure customers into the Country Stores and onto the Gateway Web site in an effort to create more business," he said.

The stores are increasingly important profit centers for Gateway, not so much because of the hardware sold there but for ancillary services such as training, which tend to bring high margins, Gray said.

In third-quarter earnings announced Thursday, 50 percent of Gateway's income and 20 percent of revenue came from software and services.

"That's everything from software and peripherals to more service-oriented things like training, direct services, home installations and data transfers, as well as the (Internet) access side of things," said Keith Martin, president of Gateway Country Stores.

"The stores are certainly a place where those things take place, because it's easier in the store environment to see and feel and play with those kinds of things," he added. "Certainly the stores are the showcase for those kinds of products and services."

The game tournament follows a string of recent promotions aimed at getting more consumers inside the Country Stores. In a recent marketing campaign, Gateway picked up the sales tax on PCs sold in the majority of U.S. Country Stores.

Gateway also used the stores as part of a $100 million advertising campaign aimed at demystifying the PC. That involves selling more training services, "which carry margins as high as 90 percent," Gray said.

Gateway plans no special sales event around the game tournament but hopes the traffic could lead to future system and services sales. The company's larger goal is to make the Country Stores more community-oriented to appeal to local consumers, something that could also further sales.

The stores will offer the opportunity to take advantage of training classes, Martin said.

"We'll be conducting some clinics in the stores, which we always do on weekends," he said. "We'll step that up a bit, so that maybe parents can go to a clinic while their child is competing."

The competition is open to four age groups: 6-9, 10-13, 14-18 and 19 and up. On the two Saturdays, contestants ages 6-9 and 10-13 will compete, while older competitors will play on the two Sundays.

Contestants will compete for the highest score on Microsoft's "Midtown Madness 2" racing game.

Gateway plans to offer 570 prizes among the four age groups for a total of 2,280 winners, who will receive prizes valued between $50 and $8,000.

Winners the first weekend will receive $50 gift certificates good at their local Country Store. Contestants with the highest scores nationwide in each age group following the final weekend of play will receive a gift certificate for a Pentium 4-based Gateway PC and $5,000.