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Gateway 2000

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Gateway 2000

Gateway, Inc.
Industry Computer hardware
Founded September 5, 1985 (as Gateway 2000) (Sioux City, Iowa)
October 31, 1998 (as Gateway)
Headquarters Irvine, California, USA
Key people James Edward Coleman, CEO
Rick Snyder, Chairman and Co-Founder
Ted Waitt, Co-Founder
Mike Hammond, Co-Founder
Products Desktops, Laptops, Servers, Monitors.
Parent Acer Inc. (since 2007)
Subsidiaries eMachines (now-defunct)

Gateway, Inc. is a computer hardware company based in Irvine, California, USA which develops, manufactures, supports, and markets a wide range of personal computers, computer monitors, servers, and computer accessories. It became a well-known brand in 1991 when it started shipping its computer hardware in cow-spotted boxes and for its creative advertising in Computer Shopper and other magazines. Gateway was acquired by Acer Inc. in 2007.

On September 4, 2007 Gateway announced that it had signed a definitive agreement to sell its professional business segment to MPC Corporation. This includes the company's Nashville-based configuration center.[1][2]

On October 16, 2007, Acer Inc. completed its acquisition of Gateway for approximately US$710 million.[3] Its final share price of US$1.90 was far below the US$4.00 average price in the mid-1990s and drastically below a high of US$84 in late 1999. The US$1.90 per share was just barely over half of the split-adjusted IPO price of US$3.75 in 1993.


Gateway was founded on September 5, 1985, on a farm outside Sioux City, Iowa, by Ted Waitt and Mike Hammond. Originally called Gateway 2000, it was one of the first widely successful direct sales PC companies, utilizing a sales model copied from Dell, and playing up its Iowa roots with low-tech advertisements proclaiming "Computers from Iowa?". Shipping computers in spotted boxes patterned after cow markings (specifically, Holstein cows) became a Gateway standard. In 1989 Gateway moved its corporate offices and production facilities to North Sioux City, South Dakota. In line with the Holstein cow mascot, Gateway opened a chain of retail stores called Gateway Country Stores, mostly in suburban areas across the United States. It dropped the "2000" from its name on October 31, 1998.

AOL acquired, the online component of Gateway, Inc., in October 1999 for US$800 million.[4]

To grow beyond its model of selling high-end PCs by phone, and to attract top management and engineers, Gateway relocated its base of operations to La Jolla, California, in May 1998.[5] In an effort to cut operations costs, Gateway made another move, this time to Poway, California, in October, 2001. After acquiring eMachines in 2004, Gateway again relocated its corporate headquarters to Irvine, California.[6][7]

Gateway purchased the Amiga assets from Escom in 1997 and since 2000, this Amiga intellectual property has been licensed to Amiga, Inc.[8][9][10]

Gateway struggled after the dot-com bust and tried several strategies to return to profitability, including withdrawal from international markets, reduction in the number of retail stores and most significantly, entering the consumer electronics business. However, amid widespread complaints about its reputedly poor customer service, none of these efforts was particularly successful from a financial standpoint, and Gateway continued to suffer major losses as well as market share in the PC business.[11] By April 1, 2004, Gateway had announced that it would shut down its 188 remaining stores.

On March 11, 2004, Gateway purchased low-cost PC marketer eMachines, for US$30 million in cash and 50 million shares of stock, valuing the deal at approximately US$262 million with announced intentions to keep the eMachines brand.[12] Gateway had hopes that eMachines' retail channel strength would complement its own strengths in consumer and business direct channels. Through the deal, founder Ted Waitt turned over day-to-day responsibilities and the CEO role to eMachines' CEO, Wayne Inouye, and remained as chairman through May 2005. Inouye announced his resignation as CEO on February 9, 2006; Chairman Rick Snyder served as interim CEO until September 7, 2006 when J. Edward Coleman was brought in as the new CEO. At this point, Gateway still sold both Gateway and eMachines brand computers through retail vendors such as Circuit City, Best Buy, TigerDirect, Wal-Mart, and CompUSA. Its Gateway brand products continued to be available in direct channels.

Gateway has outsourced some of its operations, such as customer support. In 2002, Gateway expanded into the consumer electronics world with products that included plasma screen TVs, digital cameras, DLP projectors, wireless internet routers, and MP3 players. While the company enjoyed some success in gaining substantial market share from traditional leaders in the space, particularly with plasma TVs and digital cameras, the limited short-term profit potential of these product lines led then-CEO Wayne Inouye to pull the company out of that segment during 2004. Gateway still acts as a retailer selling third-party electronic goods online.

Gateway resourced customer support within North America, priding itself as "100% North America-based support". Gateway also moved build-to-order desktop, laptop, and server manufacturing back to the United States, with the opening of its Gateway Configuration Center in Nashville, Tennessee in September 2006. It employed 385 people in that location. As of April 2007, Gateway notebook computers were produced in China and its desktops had "made in Mexico" stickers.

On October 16, 2007, Acer completed its acquisition of Gateway for US$710 million. J.T. Wang, the company's chairman, said in a statement that the acquisition "completes Acer's global footprint, by strengthening our U.S. presence."[13]

On July 27, 2008, Gateway ended all direct sales from and all phone orders. All new Gateway products could now only be purchased from major retailers and on other online sites.[14]

On August 14, 2009, Gateway relaunched their brand in Australia after a long absence from Australia's market. They started with the sale of laptops and netbooks, and Gateway launched their desktop line in sync with the launch of Windows 7.[15]

In December 2011, Acer announced that the Gateway brand would cease on all server and storage kit as of Q1 2012. It was replaced by Acer Business [16]

Current and previous products

Previous hardware

In September 2002, Gateway entered the consumer electronics market with aggressively priced plasma TVs. At the time, Gateway's US$2,999 price for a 42" plasma TV undercut name brand competitors by thousands of dollars. In 2003, the company expanded the range of plasma TVs and added digital cameras, MP3 players and other devices. By early 2004, in terms of volume, Gateway had moved into a leadership position in the plasma TV category in the United States. However, pressure to achieve profits after the acquisition of eMachines led the company to phase Gateway-branded consumer electronics out of their product line.

In September 2007, Gateway unveiled the Gateway One, an all-in-one computer which the company described this way: "The no-compromise elegant design, simplicity and expandability of Gateway's newest all-in-one PC brings sophistication to computer design, proving PCs don't have to be boxy and boring."[17]


Gateway currently ships Windows 8 as the operating system of choice for its computers

Corporate affairs

Business model

Gateway directly and indirectly sold its products to third-party retailers, consumers, businesses, government agencies, and educational institutions.

According to the 2005 Annual Report,[18] Gateway had three major business segments: Direct, Professional, and Retail.

  • The Direct segment sells to consumers and small business customers using both the Internet and call centers.
  • The Professional segment sells to medium-to-large businesses, educational institutions (K-12 and higher education) and government agencies (federal, state and local) using telephone-based and field sales teams, complemented by local, regional, and national value added resellers and facilitated through customized Web sites.
  • The Retail segment sells products directly to retailers, such as consumer electronics stores, computer superstores, and warehouse clubs. eMachines branded PCs are sold exclusively through the retail channel.

According to the 2005 Annual Report, "The retail channel has become Gateway's largest distribution channel." Gateway used to run a retail chain of stores selling their products, however these were closed down in 2004.

Gateway competes mainly against Hasee, Dell, Hewlett-Packard, Apple Inc., Lenovo, Sony, and Toshiba. In particular regions and outside the United States, Gateway competes with Fujitsu.[18]


A six-person Board of Directors ran Gateway prior to the acquisition by Acer. The former board included chairman Rick Snyder, former interim CEO, George Krauss, Douglas Lacey, Joseph Parham, Jr, Quincy Allen, David E. Russell, and Scott Galloway. Shareholders elect the board members at meetings, and those board members who do not get a majority of votes must submit a resignation to the board, which will subsequently choose whether or not to accept the resignation. The corporate structure and management of Gateway extends beyond the board of directors.

On September 7, 2006, the Board of Directors announced the appointment of J. Edward Coleman as chief executive officer. Coleman replaced Snyder, who served as interim CEO since February 2006, and was Chairman of the Gateway Board of Directors.[19]

On October 16, 2007, the acquisition by Acer became final and Gateway became a privately held company and a wholly owned subsidiary of Acer. The board of directors resigned and a new board was appointed.

See also


External links

  • Gateway homepage
  • eMachines official Web site

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