Gateway: Implementing Innovative Strategies in the IT Industry

Moreover, its 'beyond-the box' services faced stiff competition from leading ISPs, computer training institutes, finance companies and consultancy firms.

Gateway reported dismal results in the fiscal 2000-01 with revenues going down by 37 percent - $6.1 billion compared to $9.6 billion in 1999-2000.

The company reported a huge loss of $1.03 billion in 2000-01 compared to $241.5 million net income in 1999-2000. Analysts were quick to comment that Gateway's management emphasized too much on 'beyond-the-box strategy,' that made sense theoretically, but not practically. The strategy led to Gateway's costs going out of control...

In October 2002, Gateway introduced its new business strategy that had three key components - a changed logo, retailing of many new consumer electronic products, and a new focus for GCS. The company did away with its old 'cow-spot' logo to a variation of the letter 'G.'

The new logo showed a computer power button symbolizing a more high-tech appeal (Refer Exhibit V). Gateway released more than 150 new electronic products. Prominent among them were camcorders, digital cameras, handheld computers, MP3 players and plasma television, all to be sold through GCS. It also forayed into providing broadband access and home networking services...