s. The "beyond-the-box" strategy will allow the company to move into other markets outside of their traditional PC business. Though the Gateway line of personal computer sales continues to grow, increased pressure from competitors forced prices to drop approximately 13% in 1999. This price reduction in conjunction with previous price reductions has created an environment of low margins in the PC market, forcing Gateway to engage in related diversification. In a highly competitive market, related diversification through mergers and strategic alliances are considered common practices to remain competitive. Gateway is not immune to the pressures of the market and must diversify to remain intact. Their move to expand beyond PC manufacturing and enter areas such as internet management, e-commerce, web hosting, and network management systems will provide effective alternatives in helping the company meet its growth goals.It is believed that, "the market for U.S. business Internet services is projected to grow to 56.6 billion in 2003 from 7.7 billion in 1999" (investor.gateway.com). Gateway recognized the unlimited possibilities that lie within this market and have altered their strategies to remain strong in a rapidly changing environment. Gateway's strategies to expand into the Internet area will not only help support their core product (i.e. the PC) but will also provide essential non-system revenue, in the event the PC market fails. Gateway has set a strategic course for growth and expansion through diversification into new areas.Growth continues to be the focus of Gateway's strategic plan by making their products and services more accessible to the consumer. Gateway's market development strategy has helped to enhance their current multi-channel distribution model as well as develop new distribution channels. Gateway has created a new, low cost distribution channel by forming an alliance with Office Max. This new channel will allow Gat...
