Plans call for higher partner margins, model to minimize conflict
Gateway next quarter is planning to beef up reseller margins in the wake of its merger with eMachines, according to the company's channel chief.
In addition, the vendor is working out the details of a major revamping of its partner program that may likely incorporate a deal-registration component and a named-accounts model to minimize conflict in the channel, said Tiffani Bova, senior director of SMB channel sales and marketing at Gateway.
"In the first quarter, we're going to restructure our pricing strategy as it relates to the channel," she said. "As our costs drop and we create a more efficient model, some of that savings should be passed over to partners. Since the merger, Gateway's SG&A has gone from the middle 20s to sub-10."
Bova said margins on straight PC sales are in
the 5 percent to 10 percent range, but if resellers bundle those systems with peripherals, software and warranties, the margins can reach more than 20 percent on the whole deal. In the first quarter, Bova said, the efficiencies derived from the eMachines merger should add a minimum of three to five points of additional margin for Gateway resellers.
In addition, Gateway may make a midtier line of PCs available to the channel to help resellers compete with Dell, she said.
Solution providers said the margin boost should result in increased sales of Gateway products through the channel. "This is fantastic," said Ted Hunter, president of Champion Networks LLC, a Brunswick, Maine-based Gateway partner. "This actually starts to make it more profitable to sell hardware."
Bova has done a great job driving a channel-centric culture at Gateway, Hunter said. "She knows how the channel works," he said. "She has done this before. She needs to keep doing what she is doing."
Hunter said Gateway has in effect implemented an agent model for partners that is paying off.
"[Hewlett-Packard] and Dell are not looking at Gateway right now, but Gateway is a sleeper that could really shake up the hardware market," he said.
Bova said Gateway is a better manufacturer partner than IBM or HP because it does not compete for services revenue, and a better partner than Dell because it doesn't require resellers to disclose the identities of their customers.
"At the senior levels of Gateway, the channel is truly the growth engine," Bova said.
STEVEN BURKE contributed to this article.