Gateway Expands Storage Offerings - InformationWeek

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8/22/2003
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Gateway Expands Storage Offerings

New products complement vendor's move to broaden its lineup of low-end servers and use IBM for customer support.

Gateway Inc. jumps into the storage subsystems market next week as part of an effort to stabilize its commercial product strategy. The Gateway 850 SCSI JBOD storage subsystem and 820 Linear Tape Open Autoloader complement the company's moves to retool its management team, broaden its lineup of low-end servers, and tap IBM Global Services for customer support.

Gateway's expansion comes at a particularly challenging time for vendors of PCs, entry-level servers, and low-end storage. With little to distinguish products built using industry-standard components, Gateway competitors Dell and Hewlett-Packard are squeezing their supply chains for cost savings and aggressively pricing products to win market share.

For Gateway to succeed, the company has to build customer relationships through product bundles, which is where the new storage devices and servers come into play, says Brooks Gray, an analyst with Technology Business Research. Dell and HP will continue to fight it out for PC-market supremacy, but Gateway wants to make sure it's prepared to grab business from companies not satisfied with the market leaders, Gray says. And Gateway's relationship with IBM Global Services provides it with "instant credibility" regarding PC, server, and storage support and services, he adds.

The 850 SCSI JBOD, which stands for "just a bunch of disks," has up to 12 hot-swappable Ultra 320 SCSI hard drives, supporting up to 1.7 terabytes of data, and a starting price of $2,999. The 820 LTO Autoloader has a 100-Gbyte capacity of uncompressed data, an eight-cartridge carousel, and a starting price of $5,799.

In a move to better compete in the server market, Gateway last week introduced the 960X, which features dual Intel Xeon processors, four hot-swap drives, and optional redundant 450W power supplies, for a starting price of $1,399.

Gateway's move to recruit Dell veterans Scott Weinbrandt and Tim Diefenthaler is a strong indicator that the company is serious about its server and storage lines, Gray says. "Scott developed the early server lines over at Dell," Gray says. "He's very aware of what the small-business customers are looking for, and he brings a high confidence level to Gateway's strategy."

Diefenthaler understands that Gateway faces challenges in cracking the corporate market. But he sees an opportunity. "Dell is stretched thin right now due to the volume of work that they're doing," he says. "Gateway can provide similar offerings to the tier-one providers, as well as a more intimate customer experience."

Still, Gateway's expansion into the server and storage markets will take work and time. "It takes a few years of proving you have a stable product road map and getting the message out there," Gray says. "But the bottom line will come down to sales execution and marketing of their new strategy."

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