Internet Access: Gateway Breaks Ground with Internet Strategy: Offers One Year of Net Access with Most Consumer Personal Computers - Company Business and Marketing

Edge: Work-Group Computing Report, March 1, 1999

At a meeting with financial analysts Wednesday, Gateway, a leading direct PC marketer and Internet Service Provider (ISP), announced that it will provide Internet service for one year with the purchase of most Gateway consumer personal computers. The company also announced that it has formed a strategic alliance with NECX Office and Personal Technology Center, the retail e-commerce subsidiary of NECX -- a leading high technology products company that today manages the most comprehensive electronic commerce site for computer products on the Web.

Separately, Gateway also disclosed that the company will create an internal division to manage the financing elements of its highly successful PC ownership program known as Your:)Ware. "Gateway has earned the number one position in the consumer desktop market through innovative service offerings, and through affordable, personalized technology that grows with the user," said Gateway Chairman and CEO Ted Waitt. "We are aggressively moving into other business segments that surround the purchase of a PC, thereby delivering the greatest value to customers, shareholders and industry partners." Internet Access for All Starting February 26, 1999, one year of Internet access will be included with the purchase of Gateway consumer desktop, portable and convergence systems purchased for over $1,000. Customers on Gateway's local plan will receive 150 hours of Internet use per month via Gateway's ISP, gateway.net, and will pay only $1.50 for each hour over 150 hours. For customers on the rural plan, Gateway will waive the monthly access charge and these customers will only pay $3.95 per hour. To be eligible for Internet access, new Gateway owners must register within 30 days after they receive their computer. Part of its growing Internet strategy, this offer follows Gateway's recent launch of a co-branded service with Internet media company Yahoo!. The Gateway My Yahoo! default page allows gateway.net clients to personalize their Internet experience with information such as updated news, sports, financial information and local weather reports. The Gateway My Yahoo! start page also includes a customized service area for users to access Gateway technical support, gateway.com, gateway.net account information, and an Internet tutorial. "We talk with more than 50,000 people every day and understand that most of them want a computer so they can get on the Web," Waitt said. "We're offering our customers Internet access because it's what they've asked for -- it's what they want outside the box. With one phone call, or a visit to gateway.com or a Gateway Country(c) store, PC shoppers can purchase a computer designed to meet their unique needs. And, accessing the Internet will be just as easy, requiring no extra effort or software installation, since the gateway.net service is integrated into each of our PCs," he said. Alliance Strengthens Innovative Your:)Ware Strategy To expand the breadth and depth of products and peripherals it offers consumers and business clients, Gateway has purchased a minority stake in the e-commerce subsidiary of NECX, amounting to 19.9 percent of the company's value. In the future, Gateway can exercise the option of making a subsequent investment. Gateway and NECX will together launch "SpotShop.com," offering Gateway branded products and more than 30,000 SKUs representing complementary peripherals and software from leading manufacturers. "Helping our customers get more out of the box and providing them with all their computing needs is an important focus for us in our quest to secure lifelong relationships with our customers," said Waitt. "We set our sights high in our search for the best e-commerce company to round out our total computing solution, and are thrilled to have formed a strategic alliance with NECX. As a top-rated, award-winning technology company that shares the same values in giving customers what they want, we're pleased to be teaming up with them to radically expand our product offerings." The gateway.com web site gets 200,000 visitors a day. Gateway.net sports 200,000 customers and rising. Linked with NECX's award-winning e-commerce engine now attracting 50,000 hits a day, SpotShop.com will serve as a powerful one-stop technology shopping solution offering the ultimate in convenience, quality and value. Customers visiting SpotShop.com can personalize an entire computing solution based on their personal and business requirements, and receive it all from Gateway directly in a matter of days. Since 1980, NECX has been a pioneer and a leader in the open market for electronic components, computer products and networking equipment. In 1993, NECX developed the first Internet-based, transaction-capable e-commerce site, which has grown into the top-rated, award-winning NECX Office and Personal Technology Center averaging $10 million in sales monthly. Based in Peabody, Massachusetts, this privately-held company has been at the forefront of technology innovation for more than 18 years. NECX's e-commerce storefront is one of the highest rated sites on the Web. Last year alone, the site was recognized by the U.S. News & World Report "Best of the Web" award, PC Magazine's "Editor's Choice" for Computer Hardware and PC World's "Best Online Buying Experience" award. "The strategic alliance of Gateway and NECX presents an exciting opportunity for two like-minded, innovative market leaders, sharing a deep commitment to outstanding customer value and user satisfaction, to expand our respective technology product and service offerings while rapidly advancing our e-commerce capabilities," said Henry Bertolon, NECX founder, president and CEO. Growing the Innovative Your:)Ware Program To further diversify its revenue stream, Gateway will also create an internal division to manage the financing elements of the revolutionary Your:)Ware PC ownership program introduced last year. For customers concerned with technology obsolescence, the program allows users to buy a PC now with the option to trade it in after two years. It also eliminates the cost barriers of computer ownership for millions of individuals and provides a more affordable way for consumers to purchase a computer while they establish credit. At the same time, customers enjoy computers personalized just for them, with customized hardware and software, client-centered service, optional software bundles and an Internet connection. Last year, approximately $1 billion in financing transactions related to the Your:)Ware ownership program occurred. Gateway, a Fortune 500 company founded in 1985, provides complete computing solutions for clients worldwide. The company has manufacturing facilities in the United States, Ireland and Malaysia and employs more than 19,000 people around the globe. Gateway's products and services consistently win top awards from leading industry publications. Revenue for the year 1998 was $7.5 billion. FMI: www.gateway.com.