advertisement. Here's how it works： The customer calls in and， over the phone （or Internet）， designs a custom-configured computer system using cutting-edge technology. In about five days， the custom system is built and shipped. Because there is no inventory to speak of （computers are made-to-order）， as technology gets cheaper， Gateway can compete on price by changing prices daily and passing the savings on to customers.
Relying on word of mouth and a strong advertising campaign （about $90 million a year）， Gateway rode a wave of success fueled by computer buyers hunting for good equipment at bargain prices. Gateway's success， however， did not come without its share of growing pains. Gateway's first portable laptop computer was a disaster. Failing to recognize that customers had to see and touch the product to appreciate its smaller size and capabilities， Gateway ran into a wall because the company's computers were not sold in retail stores where customers could experience the product's features. This lesson would not be forgotten. Other mishaps included sending out machines that did not work and busy phone lines that kept customers waiting-sometimes for hours. Fortunately， Waitt corrected these problems early on by instituting various quality-control measures to increase customer satisfaction. And his efforts paid off. By 1996 Gateway was shipping 5，000 to 6，000 computers daily and sales skyrocketed to roughly $5 billion.
That same year Gateway launched a product that was way ahead of its time. Called Destination， it was a combo PC and 31-inch television set with a wireless keyboard， a mouse， and a home-theater sound system. Learning from past mistakes， Waitt knew he would have to get the product in front of consumers so that they could see its features. This time Gateway cut deals with retail stores. None had ever carried Gateway's stuff before.
But Waitt's biggest challenge has been trying to crack the corporate market. Whereas Gateway sold most of its computers to individual users and small businesses， rival Dell set its sights on the lucrative Fortune 1000 corporate accounts and made some expensive investments-like $22 million in research and development （Gateway spent practically zip）。 Despite doubling its sales force， Gateway discovered that selling computers to corporate customers was not an easy task. First of all， competitors like IBM and Hewlett-Packard （HP） have large， well-trained sales and service staffs who have been doing business with big companies for years. Furthermore， IBM and HP products can be purchased at traditional retail stores.
Still， relying on a cost-efficient， bare-bones， direct-sale operation is Gateway's stronghold in this cutthroat industry. The company has no plans to alter its fundamental selling strategy. "If you come see us in the next century， we'll be bigger， better， and smarter， but fundamentally we'll be the same，" notes Waitt. That is， Gateway will stick to what it does best： churning out huge volumes of PCs that are equipped with the latest technology at affordable-but not rock bottom-prices and selling them to customers over the phone.
