Gateway Intensifies Government, Education Focus

By Lisa Terry, Contributing Writer



Gateway Inc. is beefing up its government and education business by bringing in new management and realigning business units, and planning to secure relationships with select systems integrators.

With the new appointments, the manufacturer's Gateway business division is aiming, in the midterm, for the No. 2 spot in overall shipments to government, according to Jay Lambke, the unit's new vice president of government sales.

Gateway Business reaps about half the San Diego-based company's $7.5 billion in annual revenue from business, education and government.

Previously, Gateway maintained two public-sector units; one dedicated to federal government sales, and the other to state, local and education.

Now, federal, state and local will be grouped together under Lambke.

A separate education division will operate under Tom Fitzgerald, the new vice president for education. Fitzgerald most recently was director of sales for the K-12 education business at Dell Computer Corp., Round Rock, Texas. Both men report to Gateway Business Senior Vice President Van Andrews.

"Education is clearly a different business" from federal, state and local government, whereas federal, state and local government share similar proposal procedures, said Lambke.

He joined the company two months ago from Ingram Micro, Santa Ana, Calif., where he helped develop the company's government business model as vice president and general manager of the government and education division.

Within Gateway's government division, two separate organizations devoted to federal and state and local sales each will have its own directors and field staff, along with inside sales and support staff.

"The segmented structure and sales execution will allow us to spend a lot of time in front of customers with local managers who understand what is going on, and make sure we are quickly responding to customer needs," said Lambke.

Among Lambke's goals in his new position is to develop relationships with government systems integrators. "I believe we need to do a better job embracing large systems integrators with [indefinite delivery, indefinite quantity] type programs," he said.

There is no such thing "as a single-vendor situation," he said. "When there are solution-oriented contracts, we want to make sure we have good, solid, system integrator partners [aligned] with our company. Even when partnering with a reseller or system integrator, I try to get as close to the customer as I can."

Lambke would not say who Gateway might pair up with in regards to integrator alliances, nor would he provide a timetable for when the company might announce such partnerships.

But he did say he plans to be highly selective in choosing system integrator alliances, drawing on his experience in the indirect sales arena.

"I believe a company can have few very close partners," he said. "We need to make sure our partners embrace [the same] values."

But the move toward integrator relationships should not be interpreted as a shift toward an indirect sales model, Lambke said.

"The government, particularly federal, has made very aggressive moves toward direct business, and we've been very successful in that space," he said. "In the end, we're a direct business with an efficient business model. We build to order and get it out efficiently."

In other words, do not look for Gateway computers stockpiled in warehouses any time soon.

The move simply recognizes the changing nature of government acquisition.

"Obviously, it's changed quite a bit" in the course of my career, Lambke said. "From a sales perspective, it's gotten easier. It's a much more open marketplace. We're able to sit with the customers and understand their needs in a more open dialogue."

Increasingly, that also has meant talking to the agency's system integrators.

There is one downside to the changes. "It's a tougher market to be profitable in than when there were nine-year, $2.5 billion contracts from a single source. Today, there are single-year contracts awarded to two or three people. The government has gotten good at making sure it's difficult to make money," Lambke said.

Gateway has seen sales to state government increase at a faster pace than federal, Lambke said, although, "we're coming from a smaller spot in state. Our federal business should speed up real soon."

The company has been very successful with Air Force blanket purchase agreements, he said, adding, "We need to build on that in the marketplace."

Lambke predicted the Internet would play an increasingly large role in government procurement.

Already the manufacturer maintains separate "stealth" Web sites, one for each procurement vehicle and agency, "so we can drive as much transactional business to the Web as we can," he said.

The Web enables you to do a lot "of neat stuff in terms of customer intimacy," but it will never replace human interaction, he said. Business: No. 2 direct marketer of PCs in the United States. Company makes both desktop and portable PCs and servers. Also offers Internet access.

Location: San Diego

Chairman and CEO: Theodore Waitt

Employees: More than 19,000

1998 Revenue: $7.47 billion

1998 Earnings: $346 million

Ticker: GTW on the New York Stock Exchange

Source: Hoovers