Gateway, Inc.
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| Gateway, Incorporated. | |
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| Type | Subsidiary of Acer |
| Founded | September 5, 1985 (as Gateway 2000) |
| Headquarters | Irvine, California, USA |
| Key people | J. Edward Coleman, CEO Richard Snyder, Chairman Ted Waitt, Co-Founder Mike Hammond, Co-Founder |
| Industry | Computer hardware |
| Products | desktops, laptops, servers. |
| Revenue | ▲ US$3.980 billion |
| Parent | Acer |
| Website | www.gateway.com |
Gateway, Incorporated. is an American computer hardware company based in Irvine, California, 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 they started shipping their computer hardware in cow-spotted boxes, as well as for their creative advertising in Computer Shopper and other magazines. In the early and mid-2000s, the company struggled; after years as a fixture on the Fortune 500 list of largest companies worldwide, the company was not listed in 2006, having dropped to number 508.
AOL acquired Gateway.net, the online component of Gateway, Inc., in October 1999 for US$800 million.[1]
On September 4, 2007 Gateway announced that it has signed a definitive agreement to sell its professional business segment to MPC Corporation. This includes the company's Nashville-based configuration center.
On October 16, 2007, Acer Inc completed its acquisition of Gateway for approximately US$710 million.[2] Its closing US$1.90 share price is far below the US$4 average Gateway held in the mid 1990s and drastically below a high of US$84 in late 1999. The US$1.90 per share is just barely over half of the split adjusted IPO price of US$3.75 in 1993.
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[edit] History
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.
In 1998, Gateway relocated from North Sioux City, South Dakota to San Diego, California and then in 2001 made another move to Poway, California. After acquiring eMachines in 2004, Gateway again relocated their corporate headquarters to Irvine, California.[3][4]
Gateway purchased the Amiga assets from Escom in 1997 and since 2000, this Amiga intellectual property has been licensed to Amiga, Inc..[5][6][7]
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, none of these efforts were particularly successful from a financial standpoint, and Gateway continued to suffer major losses as well as market share in the PC business. 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.[citation needed] 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 Richard Snyder served as interim CEO until September 7, 2006 when J. Edward Coleman was brought in as the new CEO. Gateway still sells both Gateway and eMachines brand computers through retail vendors like Circuit City, Best Buy, TigerDirect, Wal-Mart, and CompUSA. Its Gateway brand products continue to be available in direct channels.
Like most large corporations, 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.
Recently, Gateway has resourced customer support within North America, priding itself as "100% North America-based support". Gateway has 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 currently employs 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."[8]
[edit] Current products
[edit] Hardware
Gateway sells to specific markets including Home & Home Office, Small Business, Gaming, Medium & Large Business, Government and Education. They do not use brand names to market products, instead using product models. They currently market a range of laptop products for the home markets including the C140X, NX100X, CX210, NX260X, NX560, and NX860 series.[9] They also market a range of desktops including the DX420, FX510, FX530, and Profile 6 series. These products are advertised as affordable and productive computers. Their lowest priced system is the DX420B Series, with a monitor sold separately.[10]
Gateway currently sells four LCD-based computer monitors as of January, 2008, featuring 19", 22", 24" and, 30" size displays with the 24" and 30" models featuring screen rotation. Some include USB ports.[11]
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.
Gateway also markets the C-Series of "Convertible Notebooks", notebook PCs combined with tablet PC technology including handwriting recognition with a stylus much like a personal digital assistant (PDA).
Gateway sells a line of low-end to medium-sized PC servers. These servers are manufactured by what was Advanced Logic Research, a former pioneer in PC servers, which was acquired by Gateway.
Gateway's latest All-in-One computer, called the Gateway One has been described thus: "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."[12]
[edit] Software
Gateway currently ships Microsoft Windows Vista as the operating system of choice for its computers, beginning on January 29, 2007, including Premium editions of Windows Vista. Gateway also sells "bare-bone" computers without any pre-installed software upon request but not through its website yet.[citation needed] On the computers that come with Microsoft Windows Vista, Gateway bundles a large quantity of various software. Similar to Dell, Gateway has been accused of shipping spyware.[citation needed] Gateway, with newer computers, also includes "BigFix" - an update/customer support program.
[edit] Corporate affairs
[edit] Business model
Gateway directly and indirectly sells its products to third-party retailers, consumers, businesses, government agencies, and educational institutions.
According to the 2005 Annual Report,[13] Gateway has 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 websites.
- 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 Dell, Hewlett Packard, Apple Inc., Lenovo, Sony, and Toshiba. In particular regions and outside the United States, Gateway competes with Fujitsu,[13] and long with its sister brands, Acer and Packard Bell.
[edit] Organization
A six person Board of Directors ran Gateway prior to the acquisition by Acer. The former board included Richard Snyder, former interim CEO, served as Chairman on the board. Other board members included 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 replaces Snyder, who served as interim CEO since February of that same year, and will remain Chairman of the Gateway Board of Directors.[14]
On October 16, 2007 the acquisition by Acer became final and Gateway became a privately held company and a wholy owned subsidiary of Acer. The board of directors resigned and a new board was appointed.
[edit] See also
[edit] References
- ^ [1]
- ^ Acer Inc. - Gateway, Inc.: Completion of Merger. Gateway. Retrieved on 2007-10-22.
- ^ Technology Briefing, Hardware: Gateway Plans Move. New York Times. Retrieved on 2007-06-12.
- ^ Freeman, Mike. Gateway Inc. to leave Poway. Union-Tribune. Retrieved on 2007-06-12.
- ^ Amiga Inc and Hyperion Entertainment Locked in Legal Dispute. Amiga Flame. Retrieved on 2007-08-28.
- ^ Amiga Corp. Amiga History. Retrieved on 2007-08-28.
- ^ Gateway's plan to bring back Amiga. CNET Networks Inc.. Retrieved on 2007-08-28.
- ^ About Acer - News Release
- ^ Gateway.com — Notebooks and Laptops
- ^ Gateway.com — Desktops
- ^ Gateway.com — PC Monitors/Accessories
- ^ http://www.forbes.com/prnewswire/feeds/prnewswire/2007/09/27/prnewswire200709270930PR_NEWS_USPR_____LATH067.html
- ^ a b Gateway 2005 Annual Report
- ^ Michael Kanellos (2006-09-07). Gateway gets a new CEO--again. CNET. Retrieved on 2006-09-08.
