Gateway to unveil new PCs

Gateway on Monday is expected to deliver a new line of desktops and notebooks, a move that comes as it gains ground in U.S. retail sales against rival Hewlett-Packard.

The latest Gateway retail lineup will include four notebooks, ranging in price from $859 to $1,549. These include several models with prices aimed at the retail notebook market's average sweet spot of $1,200--as measured by The NPD Group--and three desktops priced at $699 to $999. The desktops compliment a new line of $599 and lower eMachines desktops launched April 4.

Gateway is launching the PCs during a time of relative success. Having acquired eMachines and shut down its chain of stores in 2004, the company now has a network of retailers that carry its desktops and notebooks. Moreover, analysts said its broad range of products, including eMachines-brand and Gateway-brand desktops and notebooks, are winning back incremental market share from retail giant Hewlett-Packard, a company some have suggested might buy Gateway.

Gateway is "the only challenger to HP across both (the desktop and notebook) segments," said Steve Baker, an NPD analyst. "Sony is the only other company that does both desktops and notebooks, and they're certainly not a challenge to HP on a broad market-share basis. I don't think there's any question that some of that share (gained of late) is coming from HP."

Both Gateway and HP still face a fierce competitor in Dell, the world's biggest PC maker, which sells directly to customers and has virtually no retail presence. During the fourth quarter, Dell had 33 percent of the U.S. market, HP had 19.9 percent, and Gateway garnered 5.1 percent.

More-recent market-share figures show that Irvine, Calif.-based Gateway has been gaining ground against HP in the retail market, where Dell does not compete. During February, HP had 46.9 percent of combined desktop and notebook sales, while Gateway had 22.1 percent, according to The NPD Group. That's a change from January, during which HP had 51.5 percent of combined sales, and Gateway had 20.8 percent. More-recent weekly sales figures show Gateway averaging between 25 percent and 30 percent of PC unit sales versus an average for HP of about 40 percent, according to Baker.

Citing competition, HP lowered prices on its latest Presario desktop line, introduced this week. HP's four new Presario desktop models range in price from $359 to $599 after rebates.

"Our previous range was $379 to $599--now there's a $399 as well as a $359--so basically we have all four SKUs (stock keeping units) under $600," said Tom Anderson, HP's vice president marketing worldwide for consumer PCs.

Anderson said the new Presario pricing is in part a response to Gateway. However, he said NPD's weekly numbers don't tell the entire story because they don't include estimated sales figures from retail giant Wal-Mart, which sells PCs

from both makers. (NPD said it estimates Wal-Mart sales and includes them in its monthly reports.)

The Presario SR1401NX, which costs $359 after a rebate, offers a 2.66GHz Celeron D330, 256MB of RAM, a 40GB hard drive and a CD burner.

It squares off with eMachines' T3882, which has a 2.8GHz Celeron, 256MB of RAM, an 80GB hard drive and a combination CD burner/DVD drive and costs $369.99 after a rebate.

"It's the market," Anderson said. "We develop these things based on where we expect our competition to be. (Emachines) is our biggest competitor in retail, obviously."

For HP, being the largest player in PCs in the U.S. retail market means pretty much everyone is out to take some share from some part of its business, Baker said.

"I think in general what we're seeing is that Gateway provides a much more broad-based competitor to HP than we've seen at any point since the (May 2002) HP-Compaq merger," he said. "Most everyone else that's competed against them is limited in some way."

Gateway's eight new PCs include:

•  The Gateway 832GM Media Center desktop, which starts at $999, and comes with a 64-bit capable, 3GHz Intel Pentium 4 processor 630, 1GB of RAM, a 250GB hard drive, a DVD burner, a television tuner and premium stereo speakers. The Gateway 830GM Media Center offers similar components, including the Pentium 4 630, but it comes without a television tuner, which helps Gateway offer it for a lower price of $879.

• The Gateway 507GR will come with a 3GHz Intel Pentium 4 processor 530, 512MB of RAM, a 200GB hard drive, a DVD burner and Windows XP Home Edition for $699.

• The Gateway 6010GZ notebook, which is based on a 15.4-inch wide-screen display, will include an Intel Celeron M 360 processor, 512MB of RAM, a 60GB hard drive, a CD-burner/DVD-ROM drive and 802.11g wireless for $999. The Gateway 6510GZ adds a Pentium M and a DVD burner and costs $1,249.

• The 5.25-pound Gateway 3522GZ will offer a 14-inch wide-screen, an Intel Pentium M 725, 512MB of RAM, a 60GB hard drive and a DVD burner for $1,199.

• The Gateway 7426GX will shoot for gaming or graphics enthusiasts by offering an AMD mobile Athlon 64 3700+ processor along with a 15.4-inch display, 1GB of RAM, a 100GB hard drive and a DVD burner. It also packs 64MB of video memory and costs $1,549.

• The $859, 5.5-pound Gateway 4025GZ will come with a 15-inch screen.