How do you handle your dual-brand retail strategy, and how do you avoid losing market share?
That requires a lot of discipline. It's all about first defining your space in the marketplace, your relevance. eMachines was built on the value that it provides. We provide highly configured, very inexpensive products that provide an exceptional after-purchase service.
I really look at eMachines as being like Toyota, and I look at Gateway as Lexus. In terms of how we will make the brand work, we have clearly positioned eMachines in the desktop area from $700 (£385) on down and Gateway from $700 on up. In the direct channels, it's a little bit different. The Gateway brand is going to have to span all the relative price points. In the direct channel, in order to compete with Dell, we have to have offers that are fairly aggressive and that fall below that $700 price point.
But can you also adopt eMachines' tactics to reduce Gateway's costs?
Well, there are two things that we can do. We are certainly leveraging our combined scale -- the numbers of units we buy are greater than just one company alone -- that helps us with our costs. The other thing we are doing is figuring out ways to do things less expensively with fewer people or using third parties.
How did the Gateway-eMachines merger come about?
I don't think it's all that relevant. I don't mean to skirt the issue. But the most important thing that we can do today is look forward. If you start talking about the past, everyone wants to focus on "why this happened." The fact is it has happened. It's done.
Can you elaborate on what you mean by convergence products?
I look at convergence products as products that are either PC-enabled or act like a PC -- so they have some PC function with them. I wouldn't consider a DVD player a convergence product. Why? Because it doesn't require a PC to operate. An iPod, on the other hand, or a music player that requires a computer to download music or data onto a hard drive -- or flash memory is a convergence product.
Let me describe a product that, simplistically, could fall into the convergence space. What if we took a satellite receiver box and put a hard drive in it? You wouldn't consider it a convergence product, because it doesn't require a PC to operate. But what would happen if you put a broadband connection on it and added an 8-in-1 media card reader? It becomes a convergence product, because it's connected to the Internet, and it acts more like a PC.
