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Summary:

[qi:076] Taiwan-based Acer has acquired the once high-flying Gateway Computer for a mere $710 million, in what could be the last significant deal in the PC hardware business, reports the Wall Street Journal. Acer also acquired the parent of Packard Bell, thereby becoming the third-largest PC […]

[qi:076] Taiwan-based Acer has acquired the once high-flying Gateway Computer for a mere $710 million, in what could be the last significant deal in the PC hardware business, reports the Wall Street Journal. Acer also acquired the parent of Packard Bell, thereby becoming the third-largest PC maker in the world, after Dell and Hewlett Packard.

The $710 million price tag is quite a comedown from the mid-1990s, when Gateway and Dell (DELL) were spoken of in the same breath and commanded mega-billion dollars in market capitalization. Gateway was one of the companies I covered back in the day, but then slowly lost interest in as the company floundered.

Over the years, a lack of focus and ill-thought forays into consumer electronics turned the company of cow spots into a cow patch. Dell was focused on squeezing efficiencies out of its supply chain and selling to the corporations, while Gateway’s management took a scattershot approach — they did everything and were never good at anything in particular.

They opened retail stores, tried to sell to businesses, and then when low-cost PCs took off, they bought eMachines. No focus! In comparison, post-Carly Fiorina, Hewlett-Packard (HPQ) overcame a poor start, developed a coherent strategy around printers and digital media, has slowly seen its market share climb and is now neck-to-neck with Dell.

Apple (AAPL), HP and Dell are the only three U.S. majors left standing after the Acer acquisition, each with its unique expertise (and thus the ability) to play in the highly commoditized PC market place. IBM (IBM) got out while the going was good and sold its PC-business to China-based Lenovo. Apple has its own cult of users, H-P (digital media) and Dell (corporate buyers.)

Gateway founder Ted Waitt left the company in 2005 after attempting a turnaround that failed. He’s currently chairman of the Waitt Family Foundation, which funds Waitt Institute for Discovery and Waitt Institute for Violence Prevention. He has also set up Avalon Capital Group, a private investment company.

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  1. “Gateway’s management took a scattershot approach — they did everything and were never good at anything in particular.”

    As past GW employee this say’s it all.

  2. Jesse Kopelman Monday, August 27, 2007

    Did IBM really get out while the getting was good? When they sold in 2004, they had 5.2% market share (more than double Apple at the time) but only got $1.75B.

  3. Former G2K’er Monday, August 27, 2007

    As one who was there during the hey-day, when UPS was sending cow-spotted boxes all over the country, it is very sad to see Gateway leave the landscape. That corrugated steel building in N. Sioux City with the unpaved lot, the DX2/66 being touted as the greates thing in the world, Comdex when it WAS Comdex. This is the end of an era.

  4. Acer acquires Gateway · TechBlogger Monday, August 27, 2007

    [...] Read [...]

  5. I also backed Gateway back in the day before i became a nerd. Back when Intel Pentium II’s were the shiznit. Later, they were nothing to me after they first released their Media Center PC. It was horrible. Or was it an all-in-one PC? Cant remember.

  6. Acer buys Gateway, market share · ringtel dot net Monday, August 27, 2007

    [...] Acer made cheap laptops!” Add Gateway PCs to the list of things Acer makes, along with a marked increased in market share (and cheap [...]

  7. Larry Finklestein Thursday, August 30, 2007

    Former Gateway Senior Vice President Rips Current Management Over Acer Deal & More

    http://pcpitstop.com/news/rob/rcheng0709.asp

  8. マーケットシェア神話の崩壊 « maclalala Friday, August 31, 2007

    [...] of the Chinese computer brand buyers” by Carl Howe: 27 August 2007 ・GigaOM: “PC Maker Gateway Sold For $710 Million To Acer” by Om Malik : 27 August 2007 ・CNET: “Gateway: From PC powerhouse to buyout [...]

  9. I purchased my first desktop PC in 1981 (a dual-drive IBM). In 1985 I upgraded to a Gateway with a hard drive. I’ve purchased nothing but Gateway for personal use since 1985. Never had a problem with any one of my six Gateways! They’ve taken me through 21 years of teaching DOS to Windows operating systems and software-specific classes at a local community college. I was planning to purchased my seventh Gateway this year until I heard the bad news. Sad to see Gateway go.

  10. Another Sad day as Americans when we loose another company to overseas owners. Where will this stop? When will the rest of our country get bought? How long until we have to depend on the rest of the world to clothe and feed us because we sold everything. Maybe we should make better products with better prices and this wouldn’t happen.

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