Gateway, Inc.

[1] Following a seven-year-long slump, punctuated by the acquisition of rival computer manufacturer eMachines in 2004 and massive consolidation of the company's various divisions in an attempt to curb losses and regain market share, Gateway was acquired by Taiwanese hardware and electronics corporation Acer in October 2007 for US$710 million.

[3]: 40 Strapped for cash, however, Ted Waitt took out a $10,000 loan from his grandmother Mildred Smith and occupied the empty upper floor of his father's dilapidated cattle brokerage.

In early 1986, Ted's brother Norman Waitt was hired as TIPC's financial advisor in exchange for owning half of the company.

By the end of 1986, TIPC changed their name to Gateway 2000, Inc., and earned $1 million in revenues—the experimental complete computer systems contributing only a small amount to this figure.

Feeling that they could offer such computers for half the cost, Gateway 2000 released a complete PC compatible system with dual 5.25-inch floppy drives, ample RAM, a color monitor, and a keyboard, for $1,995 through mail-order.

Instead of hiring computer engineers and industrial designers to devise these products, Gateway 2000 instead relied on Ted Waitt's instincts for what customers might appreciate.

According to the company, their initial customer base shopped on price alone and rarely made requests for service parts or complex technical support.

[3]: 42 In 1988, Gateway 2000 moved their headquarters from the Waitt family ranch to the 5,000-square-foot Livestock Exchange building in downtown Sioux City, for which they paid $350 a month in rent.

You know, so that was the original cow ad.” [citation needed] The campaign was funded with only a small portion of Gateway 2000's revenues (2.5 percent) but was very successful nonetheless, the company netting $70.6 million in sales in 1989.

The company extended the pastoral theme to their shipping containers, which were white with black spots, reminiscent of Holstein cows; this monochrome design scheme also contributed to low costs.

[4]: 155  For example, the company began offering their desktop computers with the AnyKey, a 124-key keyboard with advanced macro programming for power users and programmers.

[8] The company had managed to avoid losses during a fierce price war ushered in by Compaq over the summer of 1992,[9] becoming the leading mail-order computer business in the United States.

[4]: 155  In October, Gateway 2000 established a European subsidiary in Dublin, Ireland, which staffed a full roster of departments, including manufacturing, sales, marketing, and technical support.

[11] In order to offset the higher-than-expected cost of their corporate sales boost and expansion into Europe, Gateway 2000 announced their plans to go public in October 1993.

[4]: 156 In March 1997, the company opened up a number of brick-and-mortar retail locations, called Gateway 2000 Country Stores, in various suburbs across the United States.

[25] In June 1997, Gateway 2000 acquired Advanced Logic Research, Inc., a maker of high-end workstations and servers, in a stock swap valuated at $194 million.

[4]: 156 [31] The move was a success in this right, with a new slate of executives hired in 1998, including Jeff Weitzen, a veteran of the AT&T Corporation who was named president and chief operating officer of Gateway.

[31] The new management planned to refocus the company's bottom line toward providing information technology services and software, enterprise finance and training, and consumer hardware peripherals, as the market for selling only computer systems had been seeing continually shrinking profit margins.

[4]: 156 [31] As part of this expansion, Gateway also established their own Internet service provider, Gateway.net, offered exclusively to their customers and competing with the likes of America Online (AOL).

[citation needed] Weitzen laid off many senior managers within the company and broke tradition by selling Gateway's conventional personal computers through retailers such as OfficeMax and QVC.

[4]: 157  A price war instituted by rival Dell Computer Corporation led to Gateway posting a fourth-quarter loss of $94.3 million in 2000.

[4]: 157 (in U.S.) In the beginning of 2001, Ted Waitt ousted Weitzen and several other executives from the board of directors, reassuming the role of CEO and instigating an extensive restructuring of the company.

[40] Prices of the company's computers were massively lowered to make them competitive with offerings from Hewlett-Packard and Dell,[4]: 157  while other products, such as the Touch Pad—an Internet appliance that was the result of a joint venture with AOL—were discontinued due to poor sales.

[41] Gateway's employee base was also cut nearly in half, from 24,600 to 14,000, as part of massive consolidation of the company's manufacturing plants, call centers, and Country Stores outlets.

[43] In the beginning of the year, the company laid off 2,250 employees after they had closed 19 Country Stores, a pair of technical support call centers, an Internet sales office, and a research and development laboratory.

[54] Also in late 2003, the U.S. Securities and Exchange Commission filed fraud charges against three former Gateway executives: former CEO Jeff Weitzen, former chief financial officer John Todd, and former controller Robert Manza.

[55] Weitzen was cleared of securities fraud in 2006; however, Todd and Manza were found liable for inflating revenue in a jury trial which concluded in March 2007.

[57] eMachines was founded six years earlier as a joint venture between TriGem, Korea Data Systems, and Sotec;[58] by 2003, it had raked in $1.1 billion in sales and became the third-largest seller of personal computers in the United States while only employing 140 people total in its corporate offices.

[67] In the interim, MPC Corporation announced that it had signed a deal to acquire Gateway's Professional Services Unit—which manufactured and designed the company's servers, network-attached storage devices, and workstations—for approximately $90 million.

Loading dock of Gateway's former headquarters in North Sioux City. Note the black splotch in the far-left end; the entire complex was once painted white with black splotches, in keeping with the company's corporate identity. [ 2 ]
A pizza-box form-factor desktop computer manufactured by Gateway, circa mid-1990s
Gateway HandBook , subnotebook computer manufactured beginning in 1992
Gateway Destination 2000, Pentium II variant from 1998
Gateway laptop at a Walmart in 2022