Personal computer maker Gateway believes you don't need an office in Silicon Valley to sell computers.
What you do need are manufacturing plants in logical points between parts suppliers and PC customers.That is why Gateway is now building computers in Salt Lake City, with the company investment in Utah likely to keep growing.
The first Gateway computer to be built here was packed into one of the company's trademark cow-spotted boxes in September at a $20 million plant at 5420 W. 2100 South. The company originally planned to locate a sales and customer service staff of 300 at the new plant along with 300 manufacturing employees. But it has already expanded that plan.
And despite Gateway's direct-order sales structure, a Gateway Country showroom in Murray will give the company more street presence around town. The showroom, which opened one week ago, gives potential customers a touch-and-feel look at Gateway's product line before placing orders for PCs.
Company spokesman Greg Lund said Gateway has 10 top executives in a new administrative headquarters in San Diego; has strategically located its three U.S. manufacturing plants in the east, midwest and west (Salt Lake) and still has its heart in the midwest where the company was born.
Overseas, Gateway has manufacturing plants in Ireland and Malaysia. "We've expanded because our business has expanded," Lund said. Gateway also has a new division focused on the business market that has its headquarters in Irvine, Calif.
The positioning changes frequently, but recent Dataquest figures rank Gateway as the fourth largest PC seller in the United States, with 8 percent of the U.S. market. Gateway ranked No. 3 in the home market and No. 7 world-wide, with 4 percent market share based on total shipments.
Gateway launched in 1985. In 1987, founder Ted Waitt discovered people would buy completely configured PCs sight unseen if the price was right. He and partner Mike Hammond had sales of $100,000 in their first four months of business. Gateway has since become a Fortune 500 company and reported revenues of $6.3 billion in 1997.
The company went by the name Gateway 2000 until earlier this year when it dropped the number.
Their business model remains focused on the direct channel: customers place orders over the phone or on the Web, and a custom-tailored machine is shipped directly to their house or office. As such, customers and potential customers never actually see a new Gateway computer that is for sale.
That's the reason the company has about 100 of the Gateway Country showrooms. But the showrooms are not a store, and they don't carry an inventory. "We still feel the best way to do business is to let people order their systems and build them to their specifications," Lund said. "It's great from a technology point of view - we're not shipping old technology. If Intel comes out with a new processor on May 15, we're shipping it on May 15."
Iomega recently announced it would start building Zip drives near its corporate headquarters in Roy. Parts suppliers would likely establish a presence near the manufacturing plant, the company said.
Whether Gateway's suppliers will also come to Utah isn't known, Lund said. Most of Gateway's PC components come from the Pacific rim; and the company's just-in-time inventory scheme makes it less than certain suppliers would gather near Gateway's Salt Lake plant.
Employees, on the other hand, did not have to be imported. "We've been finding great people," Lund said.
No expansion announcement has been made, "But we're liable to grow in larger volumes of manufacturing. That's the plan - to grow the plant."
An interesting note - two Russian cosmonauts on the Mir space station placed an online order from space for two Gateway computers, making the company the first vendor to receive an online order from space.