Gateway, Now in Name Only
The Gateway computer company unofficially, but for all intents and purposes, ceased to exist at the end of 2007. It was split asymmetrically and sold to two different companies. ACER has acquired most of Gateway, including the low-end home user line of notebooks and desktops. They will continue to make laptops and desktop computers under the Gateway name. The business line of Gateway has been acquired by MPC Corp. They will be selling existing Gateway business models branded as MPC, merged into their own line of systems.
Gateway Inc. sold its professional business division to MPC Corp. on September 4, 2007, for approximately $90 million. On October 16, 2007, Acer Inc. spent $710 million for the rest of Gateway. The sale of Gateway’s professional business unit further helped reduce Gateway’s selling, general, and administrative costs by between $130 million and $150 million annually, the company said.
The professional business unit recorded revenue of $900 million in 2006. The unit sold computer products to businesses, government agencies, and educational institutions. Gateway employees based in North Sioux City, South Dakota, have transitioned to MPC.
MPC Corporation was formerly known as Micron Electronics Inc. and is based in Nampa, Idaho. MPC makes up a combination of the merged PC companies ZEOS International, Micron Computer, and Micron Customer Manufacturing. In the 90’s Micron personal computers were popular high quality systems.
Gateway was working on acquiring the Dutch based computer company Packard Bell. It was Gateway’s hook into Packard Bell that motivated ACER to move on Gateway. Now ACER has both Gateway and Packard Bell as a result of their acquisition. This puts ACER in a position to challenge Chinese computer rival Lenovo. Lenovo, which bought the personal computer business of IBM in 2005, was also interested in Dutch Packard Bell.
Ted Waitt and Mike Hammond founded a company called Gateway 2000 on a farm outside Sioux City, Iowa in 1985. It became a well-known brand in 1991 when they started shipping computers in boxes colored with the black and white markings of the popularly recognizable Holstein “milk” cow.
In 1998, Gateway relocated from North Sioux City, South Dakota to San Diego, California and then in 2001 made another move to Poway, California. They also dropped the “2000,” making their name “Y2K compliant.” After acquiring eMachines in 2004, Gateway again relocated their corporate headquarters to Irvine, California.
Since the turn of the century, Gateway has struggled, losing their Fortune 500 ranking in 2006. After numerous layoffs, restructuring attempts, and product line alterations, the company finally met an end in 2007. In the 90’s Gateway quality and pricing was very competitive, and their innovative direct sales strategy was very much like what has made Dell Computer Corp. an industry leader today.
Neither Dell nor Gateway is known for producing high quality systems. Both are known for driving industry prices down and resulting in a lot of smaller PC vendors going out of business. During the low-end price war, Dell won out and Gateway fell victim to the very industry trend of direct sales that they helped usher in.
Acer Incorporated now owns most of what was formerly the Gateway computer company and has control over the Gateway brand name. Keep in mind that ACER (Acer Inc.) is the low-end Taiwanese computer company that has been making substandard computer equipment for a few decades now. The ACER name came into existence in 1987 and the company has grown and acquired other popular brands over the years, including Texas Instruments’ mobile PC (laptop) division in 1997.
One thing that may be said for Gateway is that there was a loyal customer base that stuck with the brand much like Macintosh zealots covet Apple. There was something about those black and white boxes that always caught the eye of the public even when the UPS man was delivering them to the neighbor next door. Gateway was a special brand for Midwesterners in particular.
The name Gateway was born in Iowa, and has now found itself in Taiwan. The most respectful thing for ACER to do at this point is to retire the Gateway name, since there is nothing remaining Gateway about Gateway today.