Gateway Is Acer in the Hole for VARs

Acer’s acquisition of decidedly retail-focused PC maker Gateway on Aug. 27 turned few heads in the channel. But the deal could result in improved opportunities and access to products previously unavailable to VARs if Acer can sort out the complex, overlapping sales efforts in its newly formed family of brands, according to industry insiders.

Officially, it’s business as usual at VAR-friendly Acer, the newly minted No. 3 PC maker in the world. Spokesman Rich Black said it was too early to tell how the $710 million deal with Gateway would affect partners. “Quite honestly, how the different brands will fit together in relation to the channel is still to be determined,” Black said just hours after the Taipai, Taiwan-based vendor’s deal to buy Gateway was announced.

Still, Black acknowledged that while Gateway, of Irvine, Calif., represents a mostly direct-sales brand with “vast existing retail relationships,” the focus for Acer has been, and will remain, indirect sales. “We’ve been well positioned in the channel for years. That’s one of our biggest strengths in the market,” he said. “In this effort to strengthen the Acer brand in the U.S., we see those two as compatible. As for how exactly the brands end up positioned still has not been decided.”

Adding the Gateway brand—and its associated low-end eMachines label—could help Acer bolster retail sales without irritating partners the way the company did when it inked deals over the past several years to sell its laptops, desktops and peripherals in Wal-Mart, Best Buy and Circuit City, Black said. Gateway, a far more recognizable consumer brand in the United States, already commands significant shelf space in retailers such as Best Buy, giving Acer a way to diversify its sales efforts here, Black pointed out.

Resellers and analysts were mostly upbeat about the Acer-Gateway deal, saying new offerings could be in the works for partners and pointing out that, while Gateway is a retail mainstay, it’s not a complete channel novice.

“Gateway is broader than just a consumer play, it has a presence in small and midsize businesses and in the public sector—in healthcare, education and government—with a channel program to support its partners,” said Tiffani Bova, research director for IT channel programs, sales and alliances at Gartner. “Acer has a very comprehensive indirect channel effort including distribution, direct marketers and resellers in the U.S. market, which provides an opportunity to enhance the current Gateway channel efforts.”

Shortly after the acquisition was announced, Gateway released a statement saying it would sell its professional services unit, which will likely leave the bulk of Gateway’s government and education services work to solution providers in the Acer partner family, analysts said. Gateway officials declined further comment.

Taken in total, the Gateway purchase shouldn’t hurt Acer’s position as a channel darling, a reputation the company has honed over the past three years. Acer’s channel renaissance began with the 2003 promotion of Rudi Schmidleithner to president of Acer Pan America operations. Schmidleithner almost immediately eliminated Acer’s direct sales team and its direct-sales Web site, and streamlined an aggressive pricing strategy for partners. As a result, Acer partner numbers jumped from 1,500 in 2003 to more than 9,000 last year.

The indirect sales efforts helped propel Acer, which had long been profitable in Europe and Asia, to its first ever profit in the U.S. in 2005. Schmidleithner was unavailable for comment on Aug. 27, Acer officials said.

Dan Ortiz, principal at Suncoast Computing in West Palm Beach, Fla., said blending the well-known Gateway label—with its existing base, especially in education—into existing Acer business can only mean good things. “All of these machines are going to sell at retail to a certain kind of user anyway. That’s a given,” Ortiz said. “Those consumer users really aren’t our concern. I care about Acer’s penetration into small business and verticals. If Gateway adds to that, it’s good for all of us.”

Others are taking a more wait-and-see approach.

“We actually resell both models, so we’re interested to see how it all finally fleshes out in the end,” said James Burbaker, owner of JK Computing in Blairsville, Pa. “I would hope that Acer will not use the same model for the Gateway products as their own, frequently changing model numbers and moving them to discontinued in a very short period of time.”

Brubaker added that, “We’ve concentrated largely on Lenovo in the recent quarters, so it will probably not impact us too greatly in the future.”

Gartner’s Bova said that, “Acer understands very well the sensitivity around direct and indirect sales activities. Their partners should see this [Gateway acquisition] as an opportunity to resell a strong brand, with additional products, which they may have not had access to in the past.”