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Q: What sort of company will Gateway be in five years? A: We want to be the IT department for the masses. There will be a host of new devices -- appliances, PCs, things hanging on the wall, things you carry with you. And the Net, voice, TV, and consumer electronics will merge. The infrastructure supporting this will be seamless, but complex. Our job is to mask that complexity from consumers and small businesses. Q: How will you make money? A: In five years, I won't care if I directly generate any revenue off hardware. In essence, I'd like to see Gateway send out a "technology bill." If you have a problem, the hardware will be replaced. But you're only paying X dollars a month. We'll see a blend of hardware and service revenues. As for subsidizing hardware, there will be a variety of business models. But what's very clear is that the trend to a much lower percentage of revenue coming from hardware will continue. Q: What sorts of Internet services do you envision? A: Looking further out, we want to be able to answer the question, "What do you want to do?" When we understand customers, we can help them make the best use of their time. This could be applied in all sorts of realms -- travel, buying things, watching this program but only when I want, setting up [a personal TV] channel, financial services, and others. This will create a tremendous opportunity to create a profitable profit-sharing or bounty model. Q: Why don't you set up your own online businesses? A: Our strategy is not to get into these businesses directly but to help customers get to where they want to be. I think e-tailing is a bad business. With the next level of disintermediation, all companies will sell direct. Unless you have the scale of an Amazon and are constantly moving into new categories, e-tailing means selling other people's products and recouping costs with ads. But ads won't make it. Q: To pursue this strategy, you've had to ally with AOL. Isn't this risky given AOL's reputation for toughness? A: No question, they have a reputation of being very tough businesspeople. And it was a very big bet on AOL. But at the end of the day, I still feel it was the right decision. We saw that consumers wanted an integrated solution, and we lacked the infrastructure to do that. We have a like view of how the world of Internet devices will be sold and packaged as part of a whole solution. But our strengths are very much different. Our leverage was our stores, which will be more crucial than in the PC era. So we could craft a deal that's a true win-win scenario. Q: Who will be Gateway's main competitors? A: Six months ago, I would have said AOL. Today, I'd say Sony. And AT&T with its cable play. One thing is clear: With the way we're positioning ourselves, there will be no direct competitor. |
