January 21, 2002 -- (WEB HOST INDUSTRY REVIEW) -- To most Web hosting companies, the enlarged margins and complex requirements of big, corporate customers make them prized among clients, and the target of a majority of advertising dollars.
But computer manufacturer Gateway Inc. (gateway.com) made its name in the pc business by simplifying the buying process for the average consumer, and sees no reason why it should approach the Web hosting market any differently.
Gateway’s director of e-business offerings, Dan Merrill, says the company is focused completely on the consumer and small-to-medium business markets. “Small businesses meaning under 100 employees,” he says. “Medium businesses are more complex installations, so there aren’t the number of customers available as there are in the small business segment. And then, oddly, consumers.”
Gateway, says Merrill, is number one in the consumer space in the pc market. “We want to provide a variety of low-cost plans for consumers who want to do everything from building their first Web site, to graduation, weddings to clubs like Kiwanis and Boy Scouts.”
Merrill’s explanation is that the small business segment, when it comes to Web hosting, is terribly underserved. “In the markets we serve,” he says, “in the 50 to 99 [employees] category, about 80 percent of those customers have a website. But if you look at the 10 to 19 [employees], fewer than 50 percent have a website.” This translates to an American market of about eight million, says Merrill. But based on the Web, obviously, Gateway’s hosting service is not limited to customers in the US. “And that’s why,” he says, “we can get to our planned number of customers and still be under the radar of any of the folks that are in this space.”
The presentation of the product is a remarkable departure from the norm for Web hosting products. Part of Gateway’s sales approach involves taking advantage of its ubiquitous Country Stores to deliver Web hosting plans packaged in boxes and stocked on shelves. “By offering these plans in a retail environment,” says Merrill, “we think we can reduce the barriers to adoption.”
To provide the nuts and bolts of the hosting solution, Gateway has partnered with Web hosting giant Verio (verio.com) and Minneapolis-based host Digital River, in a high-level reseller capacity. “We have a very strictly defined service level agreement,” says Merrill, “that we use to manage and monitor our partners, so that a customer of ours will always be assured of having the highest levels of availability and uptime.” For some of the more advanced e-business implementations, he says, Gateway will broker the relationship between the customer and provider.
The technical support is a Gateway branded experience, provided by the hosting partner and measured, like the hosting performance itself, according to a strict service level agreement. “In the Verio example,” says Merrill, “we have a very strong partnership with them that has been going for a year and a half, and we’re very satisfied.”
Of course, there is much more to Gateway’s Web hosting operation than a standard reselling business. There’s a recognized and trusted brand and the established local presence of about 300 stores across the US. “The last time I checked,” says Merrill, “within the United States, you were within 80 miles of a country store.” Gateway’s hosting operation also has access to the combined knowledge base and resources of a leader in the technology business.
And along with the strength of the Gateway brand is an ongoing commitment to learning and education. The company offers a series of classes and educational seminars on-site in its stores. “E-business is one of the topics,” says Merrill, “Web hosting is one of the topics, how to build a network is one of the topics and it’s free.” And part of the purpose of these seminars, he says, is to generate leads for the product. “We use it as sort of a teaser,” he says. “These are the capabilities of e-business, you can manage your business more effectively using the Internet, and here’s how. If you’re a home user, these are the things you want to think about. And, by the way, Gateway offers these services.”
Merrill says the company’s plans for its Web hosting operation involve exponential growth, and growing involvement in Web services industries. “Recurring revenue opportunities are a major focus for the company,” he says, “whether it’s Web hosting or application services delivered over the Internet on a subscription basis.” There are unproven technologies that the company is paying close attention to, and hopes to adopt as they become more mainstream. “So moving to more of an outsourced ASP model is where we are going.”
