Gateway swings back

It's been a summer of surprises, some barely believable. England has played entertaining cricket. The redesigned Guardian has dropped Doonesbury. Gateway has returned to the British market after spending most of the new millennium licking its wounds in the American heartland.

During the brand's four year absence from the UK, it's undergone a complete renovation. The Gateway stores have disappeared, to be replaced by widespread retail presence in other people's shops. Margins are tight — but costs are tighter, with staff numbers down by 75 percent, and a neat piece of repositioning that's seen Gateway appear as a more upmarket name alongside the company's ultra-budget eMachines line. With an increasing focus on laptops and small businesses, where unprofitable hardware can be juiced up with plump service deals, Gateway is playing a strong game — and has just moved back into profitability for the first time in years.

But it's still at the mercy of the retail market, which especially in the UK is no arena for the nervous. Without strong marketing and product differentiation, Gateway is up against the merciless hordes of me-too brands which exist at the very limits of commercial survivability. Laptops make money for their makers in part through a strong degree of brand recognition: right now, Gateway either means nothing to purchasers or, which is worse, conjures up vague memories of cut-price cow-themed boxes that were never quite as good as Dell.

Gateway must back up savvy deals with its retailers with strong designs and a cogent message for its prospective customers. Get those three things right, and the company will be a worthy competitor in a sector that is ripe for fresh ideas and new names. Get them wrong in any combination, and it'll be back to the farm for years to come. We hope that Gateway succeeds, for the sake of the market and to reward its courage in coming back to an unfashionable market at an unfashionable time — even if the odds of success are long. Yet longer odds have come to pass this summer. We wish it well.