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Gateway cuts business PC prices

The direct seller rolls out new PCs with some models starting at under $2,000, as it struggles to make its mark in corporate America.

    Gateway 2000 (GTW) rolled out new PCs for the corporate market today, with some models starting at under $2,000 for a Pentium II chip and monitor. The bid to spur sales to corporations also presages processor price cuts from Intel in about two weeks.

    Gateway is now offering the high-performance E3110-1300 system with a 300-MHz Pentium II, a whopping 64MB of memory, a 3.2GB hard disk drive, a 12X CD-ROM, and a 19-inch monitor for under $3,000.

    The company also announced the E3110-1233 system with a 233-MHz Pentium II, 32MB of memory, a 3.2GB hard disk drive, a 12X CD-ROM, and a 17-inch monitor would be priced at $1,979. The E-series is Gateway's line of business desktop PCs.

    For the small office-home office (SOHO) user, Gateway is offering the GP6-233 with a 233-MHz Pentium II, 32MB of memory, a 2GB hard disk drive, 12X/24X CD-ROM, and 17-inch monitor for $1,999.

    The aggressive pricing mirrors Gateway's strategy in targeting the consumer PC market, where the company just last week announced a PC with 233-MHz Pentium II processor and a 17-inch monitor for under $2,000.

    "At a mainstream price point, you can get a terrific business-class machine," says John Zanot, enterprise line marketing manager for Gateway

    But good prices alone aren't going to attract the average corporate customer, says one analyst.

    "Dell is doing well in the corporate market, but they've been targeting and working in those accounts for many years...That has yet to be taken care of for Gateway," says Kevin Hause, an analyst with International Data Corporation.

    "It takes months and in some cases years to get in with corporate buyers and convince them they can trust you with their infrastructure and as an information technology provider...On top of that, [vendors like Dell and Compaq] already had a long term relationship with other vendors, so sometimes you have to wait for others to screw up [before you get a chance to sell]," Hause says.

    Gateway isn't the only vendor which recently started knocking on corporate IT doors and is still waiting for a warm reception from the bigger customers. Micron and Toshiba also face the same hurdles as Gateway, Hause says.

    "Toshiba--they've got the advantage of being in these companies already with their portables, but as they try to get in as desktop provider, it's not going as quickly as might have expected," according to Hause.

    It is to early to tell whether Gateway's foray into the enterprise is working, Hause says, because the E-series computers have only been available for about a quarter now.

    Gateway is seeing growth in unit sales as a result of its corporate push--analysts note that Gateway's prices for a variety of configurations have been lower than Dell's--but the company isn't expected to see increased profits from those sales just yet.