Gateway opens door to direct riches

Gateway 2000 has followed Dell in confirming that direct market PC vendors are doing very nicely thank you, despite a small overall increase in PC market share in the UK. Gateway has recorded a 39 per cent increase in PC sales in its first quarter, compared with last year.

Gateway shipped nearly 500,000 PCs in its first quarter to March 31, 1997 at a revenue of $1.42 billion, a 24 per cent increase on revenue earnings a year ago. Net income rose 34 per cent to $67.5 million from $50.5 million last year.

The results come just two months after Dell announced astonishingly good financial figures and Dell UK managing director Mike Newton denied the company was gaining market share at the expense of profit margin.

The blossoming results of the direct vendors will send positive messages to Compaq Direct UK that it has made the right decision in adopting a direct sales model.

According to UK market research firm Romtec, there has been a small increase in the direct market in the UK over the past year. UK direct PC sales account for 34 per cent compared with 33 per cent last year, with Dell and Gateway the two top names. Dell accounts for 23 per cent of the UK direct market while Gateway accounts for 14 per cent. The Opus Tiny Group is close behind on 13 per cent while Viglen and Elonex share around eight per cent.