all bases covered

1

July 25, 2000

All Bases Covered and GatewayAn Alliance Opportunity

2

Gateway Overview

Fortune 250 global company with 1999 Revenue of $8.6B.

Founded 1985 Sioux City, IA.

Over 3 Million PC Shipments in 2000.

21,000 employees worldwide

Nationwide chain of 290 Gateway Country stores as of 6/00.

25% share of US Consumer PC spend Q1 00.

Major Locations

US San Diego Irvine North Sioux City Kansas City Salt Lake City Hampton

Europe Dublin, Ireland

Asia Pacific Malaysia Australia/New Zealand Japan Hong Kong Singapore

“ONLY BY EXCEEDING OUR CLIENTS’ EXPECTATIONS CAN WE EXCEED OUR OWN

DREAMS.”

3

$55$276

$116

$627

$193

$1,107

$271

$1,732

$358

$2,701

$616

$3,676

$964

$5,035

$1,076

$6,294

$1,546

$7,468

$1,898

$8,644

$0

$2,500

$5,000

$7,500

$10,000

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

Gross Margin Revenues

Revenue CAGR 47%

Gross Margin CAGR 48%

Revenue CAGR 47%

Gross Margin CAGR 48%

$ in millions

Strong Track Record of Growth

4

Financial Overview

$0.0

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

$7.0

$8.0

$9.0

94 95 96 97 98 99

Year

Global Revenue

$0.00

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

$1.40

94 95 96 97 98 99

Year

EPS

‘00 YE Expectations Balance

Q1 “00‘00 YE Expectations Balance

Q1 ‘00

5

Gateway’s Business StructureGateway’s Business Structure

Business Units

Asia-Pacific

Business• Business

•Government•Education

EMEA

Consumer• Phone•Internet•Country Store

6

GeographiesGeographies

% of 1999P Revenues

Client SegmentsClient Segments

% of 1999P Revenues

Global Company AddressingMajor Client Segments

7

Lifelong Relationships

Beyond theBox

Hardware Enhanced/ExpandedChannels

InternationalExpansion

BrandReach

Positively Change the Way People Live, Learn, Work and Play

• Diverse Revenue and Profitability Streams• Lifetime Customer Value

HUMANIZING THE DIGITAL REVOLUTION

TechnologyEmpowerment

8

US BusinessUS BusinessUS ConsumerUS Consumer

Source: Intelliquest research, 3Q99.

42%

25%

37% 40% 39%

55%

67%49%

53%60%

0%

25%

50%

75%

100%

Gatew ay HP Dell Compaq IBM

97%

92%

86%

93%

99%

48%

35%

64% 60%

40%

51%

62%

31% 38%

59%

0%

25%

50%

75%

100%

Gatew ay HP Dell Compaq IBM

99% 97%95%

98%99%

Strong Brand Awareness

9

Daily Sightings of Gateway

Country Stores 12,000,000

Advertising

TV 64,000,000

Newspaper/Magazines 1,400,000

Outdoor 5,600,000

On-Line 10,000,000

93,000,000

10

Daily Contact with Gateway

Tech Support Calls 42,000

Client Relations Calls 14,000

Phone Calls to Sales 23,000

Phone Outbound Calls 47,000

Store Traffic 33,000

Gateway.com Web Visits 240,000

Internet Users 500,000

899,000

11

Web

Stores

Phones

Inbound CapabilitiesOutbound Capabilities to Leverage

Embedded Base

Distribution Channels

Over 300 Country Stores WorldwideTarget Mix in SMB at 50%Adding ServicesAdding Outbound Sales Reps

10% of 1999 Revenue Exit RateRevenues Increased 100%+30,000+ SKUs [peripherals & other hardware]10,000+ Software Titles

12

CURRENTLY UNDER PENETRADED IN RETAIL CHANNEL

1999

Gateway

Market

Share

26%

(Market Share)

Channel As

% of

Marketplace

37%

60%

3%

1999

Gateway

Channel

Share

46%

13%

35%

Telephone

Retail

Internet

13

EXPAND RETAIL CONSISTENT WITH OUR BRAND STRATEGY

•Country Stores

•OMX

• ClassicRetail

• ClassicRetail

LimitedControl

OverCustomer

Experience

CompleteControl

OverCustomer

Experience

Wide ProductBreadth

Narrow ProductBreadth

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EXECUTING TWO-TIER RETAIL STRATEGY

318257

3000

Q1 2000 Future

Country Stores Store Within Store Concepts

Pipeline

• 1,000 OfficeMax Locations• 1,100 Rent-Way Locations• Additional Country Stores

5X Increase

15

Systems,Devices& Software

Training

Service & Support

Financing

Networking &Access

Portal/Content

Beyond-The-Box Strategy is Key to Competing

16

1998 2002

$75B PCs

$240 Billion

$7 Online Advertising

$43 Internet Services

$18 PC Appliances

$103 PCs

Consumer E-Commerce $50

Internet Access $10

Consumer Software $5

High-End Systems $5

Competing in a Broader Market

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Telephone Sales

5.3 Million New telephone calls annually

8 Million magazines / 8 Million catalogs circulated annually to installed base

5 Million installed base

Welcome kits, direct mail, ‘buck slips’ to installed base several times per year

25 Million calls to Client Care

Approved selling channel

18

Gateway Country

Over 300 Stores in the U.S. by the end of year

16 Million people walk through annually 80% of the U.S. population lives within 10 miles 4,000 classroom seats 8,000 people per week sign up for training Sales force trained to orient customers to

technology No inventory - showcase technology

Supplemented by Office Max

1000 Stores Nationwide Significant Gateway-dedicated sales area Includes Your:)Ware 2.0 kiosks

19

Training

Comprehensive Consumer Training Offering in Multiple Media:

Computer Based Training, Web Based Training, Instructor Lead Training

Pre-Proficiency Training Offerings

Classroom Training Offered in Over 250 Locations Nationwide - More than 4,000 Seats

Training Offerings Mapped to PC Configurations

20

Internet

Gateway.Net Access serves over 1 million subscribers

Fastest Growing ISP in 1999 60 Million ad impressions per month on .Net portal

Gateway.com growing portion of total revenues

500 Million impressions in 1999 Includes on-line sale of over 30,000 SKU’s (peripherals &

software) SoftwareBuys.com - 10,000 Software Titles

90% of Gateway clients have internet access

89% shop on-line AOL Alliance

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Business

1999 - $3.1B Sales; 1.8 M Units Segments: SMB; Education; Government Developing distinct value propositions for three target SMB segments

“Stand-alone” small businesses (No LAN, no server) “Connected” SMB (networking, email, remote access - turnkey) “Self-service” accounts (multiple servers, WAN/LAN, IT staff)

Business Training Financing/Leasing Key Relationships

Sun Microsystems eSoft - Subscription based Internet connectivity solutions

Firewall, Email, VPN, Web Hosting, B2B ASP App’s, Remote IT CFN - Employer PC Verio - Hosting GE Capital IT Solutions Unisys Wang

22

Targeting 52% of Market

0%

100%

1999 1999

Government8%

K-12 3%

Enterprise29%

Small32%

39%

30%

46%

21%

8%

9%

Medium20%

Higher Education7%

CAGR98-9928.3M

Government18%

Enterprise16%

Small26%

Medium12%

1.8M

Education28%

Note: US estimates; 1999 Market Units include IDC Q4 estimates; K-12/Higher Education units based on Education Revenue split; GTW Q4 SMB Split based on Q1-Q3 percentsSource: IDC, December 1999

13%

17%

3%

4%

5%

% ShareCAGR99-03

11%

11%

11%

10%

16%

Market Gateway

Shareof UnitShipments(%)

23

“It’s the Basics!”

7171%%

6666%%

Offers primarily focused on keeping their business up and Offers primarily focused on keeping their business up and running were considered most importantrunning were considered most important

6969%%

6262%%

% Rate % Rate “Important”*“Important”*

Telephone support specifically Telephone support specifically dedicated to your businessdedicated to your business

Guaranteed on-site repair Guaranteed on-site repair service within 4 hoursservice within 4 hours

Training online or in your townTraining online or in your town

Installation and repair techs Installation and repair techs located in your townlocated in your town

Built to order desktops, Built to order desktops, laptops or serverslaptops or servers

High speed DSLHigh speed DSL

Pre-loading of softwarePre-loading of software

5757%%

5555%%

5151%%

11

22

33

44

55

66

77

Importance Importance RankingRanking

*Top 3 Box, Scale of 1 to 10*Top 3 Box, Scale of 1 to 10

24

Second Tier Technology Needs Were Centered Around Advisory Relationships

Face to face “needs Face to face “needs assessment” consultationsassessment” consultations

Dedicated account rep Dedicated account rep who visits youwho visits you

Dedicated rep in town Dedicated rep in town you can visityou can visit

Multiple financing optionsMultiple financing options

Technology center in town Technology center in town to see the latest to see the latest

technologytechnology

46%46%

43%43%

41%41%

41%41%

41%41%


88

99

1010

1111

1212



25

Third Tier Technology Needs Centered Around E-services

Custom build Custom build websitewebsite

Full array of Full array of e-commerce solutionse-commerce solutions

Host and take care Host and take care of your websiteof your website


Remote monitoring Remote monitoring of serversof servers

38%38%

36%36%

34%34%

32%32%

1313

1414

1515

1616



26

LIFETIME VALUE OF CUSTOMER

Access/Connectivity

Access/Connectivity Portal

PortalPC/

Appliance/Networking

PC/Appliance/Networking

FinancingFinancing

Add-Ons/Peripherals

Add-Ons/Peripherals

Service/Training

Service/Training

Internet Value Chain

SystemsCrossSell

CLIENTS

SoftwareSoftware

ContentContent

CommunityCommunity

CommerceCommerce

CommunicationCommunication

“KNOWING OUR CLIENTS AND SERVING THEIR NEEDS IS ABSOLUTELY EVERYTHING AT GATEWAY.”

- Jeff Weitzen, President and CEO

27

Partnering For Beyond-The-Box Capabilities Partner

ISP Improved Infrastructure Lower Cost

AOL

Financing

SmallBusiness

Education

Developed Gateway Captive Bank Created online credit approval

Scalable Internet Application Infrastructure Professional Web site Services Broadband

Curriculum-based Products K-12 Internet Filtering Product

MBNA, Associates, & Hshld SRR

Verio eSoft CFN

Lightspan N2H2

AOL/GTWAppliances

Linux Operating System / Crusoe Processor Internet Browser

Transmeta Netscape Gecko

28

Gateway has taken a leadership position in the Employer PC Space

Fully integrated employer PC programs have at least four components– PC– ISP– Employee Portal– Value added services for employers and employees

Gateway is entering into a partnership with CFN– CFN is a leader in the Health/Wealth portal space– Cross promote CFN products in Gateway’s marketing and sales channels– Invest in CFN

In return, CFN will help Gateway by – Building and managing employer/employee portals– Leveraging its sales capabilities in this space– Providing value added HR related services to employers and employees– Subsidy for Gateway on each unit sold, to be offset by future portal advertising revenues

Employee PC - CFN Partnership

29

Partner Opportunity

Complete Ownership of Customer with End to End Solutions

Worldwide Distribution Scale

Marketing Strength

Positive Brand Awareness

Access to New Customer Base

Seasoned Management Team

all bases covered

Documents