Gary, I do think the direct model is nonsense, whether you put up catalogue showrooms or not. We have seen MUEI faltering in it and Gateway moving away from it by building the showrooms. BTW, when the general catalogue retailers built a lot of showrooms, they were only one step away from eliminating their catalogue sales.
Dell has done well serving business and high end buyers. In other words, folks who don't mind overpaying or waiting for delivery.
I totally disagree with your depiction of the avg. Gateway consumer. "Sophisticated?" Not according to their ads. My guess was that they were the lowest of the low. The folks who were willing to accept poor reliability and high prices because Gateway would give them credit when nobody else would. I do agree with you that that market is huge. I am just not certain it is profitable in the long run. And we have yet to see what happens when the trade-ins occur and when the defaults mount.
But, as I have mentioned many times, Gateway has long shown numbers that outpace the industry. If they are honest numbers, then kudos to them. I think they are fishy, but I don't know why. This reminds me of CHS when they reported gangbusters numbers while the rest of the channel cos. were hitting the wall. They just lied. I expect a big writeoff of today's "profits" at some point, but since I don't know when, I have avoided Gateway puts.
MB
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