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Remodeling done, Gateway to open store doors

Next week, the rehabbed PC maker will unveil its new retail store design, the last step in its effort to transform itself into a provider of brand-name consumer electronics gear.

Gateway plans to hold a grand reopening for its retail stores next week.

The company is set to formally announce on Tuesday that it has completed renovations of its 190 retail stores and to discuss several new PC and storage products at an event in New York, according to sources familiar with the company's plans.

Ted Waitt, Gateway's CEO, is expected to make the announcements at a reopening ceremony at the company's Union Square store in Manhattan.

The store renovations are the last phase of the PC maker's drive, launched earlier this year, to establish itself as a consumer electronics brand and to use home electronics products to help it climb back to profitability. After launching more than 50 new products, the company is heading down the stretch toward the holiday shopping season, which begins at the end of this month.

Gateway will now use its stores as a showcase for its home electronics gear. Customers will get detailed, hands-on views of Gateway's Connected DVD player, music player and digital cameras, and will be able to see how the devices can interact with PCs, home theater gear and flat-screen televisions, the sources said.

The new stores, which Gateway has said will have a living-room motif, will include multiple stations that show off the different products, from digital cameras to PCs and TVs. Gateway expects that, if it does its job correctly, holiday shoppers will leave its stores with more products than they came in for, the sources say.

The Gateway stores--remodeled over a period of about 90 days--are also expected to include new stations for business products, such as servers and storage systems.

In addition to unveiling the redesigned stores, Gateway will discuss several products. It plans to launch a convertible tablet PC, along with a new computer design, whose chassis puts it somewhere between a desktop and a notebook, sources familiar with Gateway's plans said.

Gateway has been experimenting with different PC designs. The company recently launched two new all-in-one desktop computers, which offer a built-in screen. One, the Profile 5, is aimed at businesses, while the other, the Gateway 610 Media Center PC, was designed to allow consumers to watch videos, play games and view television programs.

The company's transformation hasn't been an easy one. Gateway has cut about 3,200 jobs and closed 82 stores since January in its quest for profits. The holiday season should provide the first real test for the consumer electronics strategy.

To succeed, the company needs to avoid creating a technology museum and instead present its products in a manner that encourages consumers to buy, said Steve Baker, an analyst with NPD Group.

"One of the things about being a retailer is presenting stuff in an agreeable fashion," Baker said. "This shows the customers you're serious about providing them with the products they want."

One factor working in Gateway's favor is that it can control the environment inside its stores, Baker said.

"It has to take that as far as it will go," he said. "What you want to see is that it's gaining sales and sales momentum in this category. It's possible (Gateway) might not make money (this quarter). But what I want to see, on an overall basis, is it's starting to drive some revenue."