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Technology Stocks : Gateway (GTW) -- Ignore unavailable to you. Want to Upgrade?

To: D. Swiss who wrote (7539)	4/21/2000 9:17:00 AM
From: Edwin S. Fujinaka	Read Replies (1) \| Respond to of 8002

Interesting article in the Japanese press on selling direct online competition for Gateway and Dell. Note that the conventional brick and mortar retailers are resigned to the competition, but they are making money with software and peripheral sales as well as educational classes. Gateway's business model in the US seems to be a nice way to cover all the bases. Also, I think there is a lot to be said for the Country Store concept since you can actually talk to someone face to face with problems (So far they haven't been too good with technical answers though.): Friday, April 21, 2000 ANALYSIS: Retailers Stoic As Fujitsu, NEC Begin Online Sales TOKYO (Nikkei)--Fujitsu Ltd. (6702) said Thursday it will begin direct sales of personal computers to individuals over the Internet on Friday. NEC Corp. (6701) will also start direct online sales this summer. Retailers are reacting with unexpected calm to the moves, which may reduce their importance in the sales chain. Store operators have decided to face reality, since the expansion of online sales cannot be halted. The announcement by the two PC giants, which control just over 40% of the domestic PC market, marks the beginning of a new era of direct selling in Japan. "Web sales are an unavoidable current. Though they compete with door-to-door and retail sales, they also provide a new business opportunity," Minoru Otsuka, president of Otsuka Shokai Co., told a gathering in Tokyo early this year organized by the Japan Computer System Sellers Association (JCSSA). Otsuka's remarks were a turning point, acknowledging the end of a period when distributors discussed the rights and wrongs of direct online sales and the beginning of a new one when they feel about for ways to coexist with manufacturers. At the annual JCSSA panel discussion preceding the Tokyo gathering, some argued that online selling will become a new sales tool to add to retail and door-to-door sales. PC division heads at such companies as NEC, Fujitsu and IBM Japan Ltd. took part in the discussion. Fujitsu will offer a made-to-order service on its Web Mart, allowing desired specifications to be selected online. The customized PCs will be made as requested and shipped. The company will target sophisticated PC users, expecting other customers, mainly beginners, to buy PCs through retailers. NEC's online sales approach is similar. Since PC beginners now account for 70% of its PC customers, the firm will try to win over more experienced users who often buy from Dell Computer KK and Gateway 2000 Japan Inc., pioneers of the made-to-order system. It also aims to minimize the effect selling online will have on existing sales channels by distinguishing Internet and retail sales. Fujitsu and NEC will be able to deliver PCs ordered online in about one week because they have assembly plants in Japan, giving them an advantage over Dell Computer, which imports products from Malaysia. Toshiba Corp. (6502) and Hitachi Ltd. (6501) are already selling PCs directly online, but of all PCs shipped, NEC is ranked first with a 22% share of domestic shipments in 1999, followed by Fujitsu at 21.5%, according to market research firm Dataquest. Yet, despite the figures, retailers have remained levelheaded about the announcement by the two top makers to reduce the importance of retailing by selling online. Behind the calm demeanor of the store operators is their understanding that the Internet will become a powerful tool for them as well, if handled properly. While makers can only sell their own products, retailers can offer PCs from a range of manufacturers. Another reason for the calm attitude is the falling profit margins on PCs at stores. Some retailers are making more money selling software and peripheral equipment, holding PC classes and installing related products. "The number of retailers opposed to makers selling directly online is decreasing. Both retailers and makers have begun to realize they should move in the same direction," said Katsushi Shiga, principal analyst at Dataquest. (The Nikkei Industrial Daily Friday edition) --------------------------------------------------------------------------------