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Gateway, Inc.

Gateway, Inc., previously Gateway 2000, Inc., was an American computer company originally based in Iowa and South Dakota. Founded by Ted Waitt and Mike Hammond in 1985, the company developed, manufactured, supported, and marketed a wide range of personal computers, computer monitors, servers, and computer accessories. At its peak in the year 2000, the company employed nearly 25,000 worldwide.[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.

Gateway, Inc.
Logo used since 2004
Formerly
  • TIPC Network (1985–1987)
  • Gateway 2000, Inc. (1987–1998)
TypePublic
Industry
FoundedSeptember 1985; 37 years ago (1985-09) in Sioux City, Iowa, United States
Founders
DefunctOctober 2007; 15 years ago (2007-10)
FateAcquired by Acer Inc.; brand revived in 2020
Headquarters,
United States
Area served
Worldwide
Products
Number of employees
25,000 (2000, peak)
SubsidiarieseMachines (2004–2007)
Websitegateway.com

History Edit

1985–1990: Foundation Edit

 
Gateway 2000 logo used from 1987 to 1998
 
A pizza-box form-factor desktop computer manufactured by Gateway, circa mid-1990s

Gateway was founded as the TIPC Network by Ted Waitt and Mike Hammond in September 1985. Ted Waitt was the company's principal founder; he was later joined by his older brother Norman Waitt, Jr.[2]: 38  Before founding the company, Ted Waitt lived on his family's cattle farmhouse in Sioux City, Iowa. He had dropped out of two different colleges to work on the farm before landing a job at a computer store in Des Moines, Iowa. After nine months of experience gained on the job, Ted had the idea to start his own computer reselling company that would allow him to sell to niche customers who needed systems in between the lower- and upper-ends of the personal computer market, whose systems were either too limited in terms of speed and memory or too expensive with seldom-used higher-end features.[2]: 39 [3]: 153  Ted also found that educated salespeople could successfully sell computers to customers completely over the telephone, impressing on him the idea that he could eliminate overhead by having a robust remote salesforce and impressive catalog.[2]: 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.[2]: 40 [4] He was joined by Mike Hammond, Ted's coworker who trained the latter to become a computer salesman at their previous job. The duo's first products were software and peripherals for Texas Instruments' TI-99/4A home computer, advertised in various computer magazines. The TI-99/4A had been discontinued in the previous year and was largely considered obsolete by 1985. TIPC Network charged their first customers with a membership fee of US$20, in order to flush the company with more start-up capital.[2]: 40 

Owing to their products' very low costs, TIPC earned up to $100,000 in sales within the first four months, beating out many of their competitors in the TI-99/4A aftermarket segment. In early 1986, Ted's brother Norman Waitt was hired as TIPC's financial advisor in exchange for owning half of the company.[2]: 40  That year, the company began selling their own hand-assembled computers locally on an experimental basis. 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.[2]: 36 [3]: 154 

Gateway 2000 was inspired to produce computer systems compatible with IBM's hugely successful Personal Computer in mid-1987, after Texas Instruments had announced a rebate program allowing customers to trade in their older home computer systems (including the TI-99/4A), in order to contribute toward a $3,500 credit on Texas Instruments' PC-compatible systems. 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. The system was a success for Gateway 2000, with revenue increasing from $1.5 million in 1987 to $12 million in 1988.[2]: 42 

The company's first computer systems were assembled from parts supplied from other mail-order companies. 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. Because of this, Gateway 2000 maintained a slim overhead, and they were able to price their products below competitors.[2]: 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.[2]: 42  In the same year, the company launched their first major advertising campaign, taking out a full page advertisement in computer magazines for the first time to advertise the company and its products, putting particular emphasis on their low cost and the company's Midwestern United States roots. 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.[3]: 154 

1990–1995: Early growth Edit

 
Gateway HandBook, subnotebook computer manufactured beginning in 1992

In January 1990, Gateway 2000 moved their headquarters from Iowa to North Sioux City, South Dakota, in order to take advantage of South Dakota's lack of income taxes.[2]: 42  The company expanded their advertising campaign that year, producing a number of humorous half- and full-page spreads, featuring employees of the company (including Ted Waitt) in pastoral settings, photographed by a local studio. 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.[2]: 42–43 

Gateway 2000 posted $275 million in revenues by the end of 1990.[2]: 36  Fearing that the company was growing too big for them to handle, the Waitts and Hammond recruited a public accounting firm and poached six executives from rival computer manufacturers to plot the company's growth. These executives in turn set up a number of divisions to promote innovation within the company, including a marketing department with five employees, a group dedicated to exploring new technologies with twenty employees, an "Action Group" of ten executives whom Ted Waitt deferred to every two weeks, and a "Road Map Group" to evaluate product development and branding choices. In addition, the company hired a media buyer to handle the company's advertising assets advertising and contacts with magazines and other mass media companies.[2]: 45 

In the summer of 1991, Gateway 2000 commissioned the construction of a 44,000-square-foot manufacturing plant down the road from its North Sioux City headquarters, expected to increase its manufacturing output by 30 percent. That year, the company also expanded their dealer channels beyond the individual buyer into fleet sales to enterprises. Gateway 2000 offered such corporate clients training programs, troubleshooting literature, and more rigorous customer service. While still a private company at this point, Gateway 2000 elected to release financial results quarterly via press releases in order to project an image of legitimacy among corporate buyers.[2]: 45  By 1991's end, Gateway 2000 posted $626 million in sales.[5]: 14 

Despite the added research and development divisions in 1991, the company admitted to falling behind their competitors in terms of innovation. In an attempt to catch up, Gateway 2000 began segmenting its marketing to appeal to customers with specific needs beyond value and price. In 1992, they released the HandBook, a lightweight subnotebook aimed at the executive market. At the end of 1992, the company added 200 people to their support and sales departments, increasing the number of total employees in the company to 1,700.[3]: 155  By 1992's end, Gateway 2000 reported $1.1 billion in sales.[6] The company had managed to avoid losses during a fierce price war ushered in by Compaq over the summer of 1992,[7] becoming the leading mail-order computer business in the United States.[3]: 155 

Gateway 2000 reported their first drop in revenue in the second quarter of 1993, which they attributed to quality control problems reported during the final quarter of 1992 and a stagnant roster of products.[8] To remediate the latter, the company released a notebook with a passive-matrix color LCD and a newer subnotebook. In order to stave off the rise of competitors Dell and IBM in the mail-order market, Gateway 2000 began pursuing markets outside the United States and planned to ramp up their corporate sales by the end of 1993. In service of the latter goal, Gateway 2000 launched a division dedicated to handing major accounts, poaching an executive from IBM to head this division. Gateway's technical support staff doubled its headcount to just over 400; Gateway 2000 assigned each of their large corporate customers their own dedicated technical support associate.[3]: 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.[9]

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.[10] With their initial public offering the following December, the company raised $163.5 million through selling 10.9 million shares.[11] These shares represented a 15 percent stake in the company; Waitt retained ownership of the other 85 percent of Gateway 2000.[5]: 14  Along with financing the aforementioned two initiatives, this infusion of capital also allowed Gateway 2000 to expand its product roster to include networking hardware such as fax modems, peripherals such as printers, and various software products.[3]: 154  By the end of 1994, the company employed 5,000 and posted $2.7 billion in revenue.[12]: 20 

1995–2000: Major expansions Edit

 
 
Left: Gateway 2000 P5-120, 120-MHz Pentium-equipped tower computer manufactured by Gateway in around 1996; Right: Gateway Solo 2200, 166-MHz Pentium notebook from the same year

In September 1995, Gateway 2000 commissioned the construction of a manufacturing facility in Hampton, Virginia, worth between $18 million to $20 million and an overseas manufacturing plant in Malaysia to serve computer buyers in East Asia.[13]: 1 [14] In August 1995, the company purchased an 80-percent stake in the Australian Osborne retailer,[15] and in the following November, Gateway 2000 established their first website on their first Internet domain, gw2k.com.[16] By the end of the year, Gateway 2000 posted revenues of $3.7 billion.[17]

In 1996, Gateway 2000 introduced the Destination 2000, an early home theater PC that used a large-screen CRT television as its monitor. It was intended for consuming home media content and multimedia software and came with a built-in modem for Internet connectivity. The Destination 2000 sold poorly, and after several months Gateway began offering these systems at retail outlets such as CompUSA at deep discounts.[3]: 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. Gateway Country Stores did not stock any of the company's products but had a number on display to allow customers hands-on experience with Gateway 2000 computer systems; customers had to order by phone or through the company's new website. Their first location was in Tampa, Florida.[18] By 1999, Gateway 2000 had opened up over 140 Country Stores.[3]: 156 

In April 1997, Compaq Computer Corporation was in talks to purchase Gateway 2000 to bolster the former's presence in the mail order market.[19]: 4  The deal was nearly inked—with Gateway set to receive $7 billion—before Waitt vetoed the acquisition that summer.[20] Gateway 2000 themselves acquired two companies in the year, the first being the Amiga Technologies subsidiary of Escom AG, a German company that had filed for bankruptcy in the preceding year. Announced in March 1997,[21] the deal was finalized in the following May, with Amiga International, Inc., incorporated as a subsidiary of Gateway 2000 in South Dakota.[22] Gateway 2000 paid Escom $13 million for the patents to Amiga technologies, the majority of which centered on multimedia capability.[23] 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.[24]

In late 1997, Gateway 2000 began phasing out the use of cows in their image in an attempt to project a more mature image to their corporate clients.[25] Simultaneously, the company formed Gateway Major Accounts, a subsidiary focused on fleet sales to enterprise.[3]: 156  By 1997's end, the company posted $6.29 billion in revenue and $1 billion in profit.[26]

In 1998, the company began dropping the "2000" from their moniker, as the coming turn of the millennium meant that "Gateway 2000" would soon sound antiquated.[27] The company was formally reincorporated as Gateway, Inc., in May 1999.[28] Also in 1998, Gateway moved their headquarters from South Dakota to La Jolla, San Diego, California—both because Ted Waitt himself wanted to move in California and also to move the company closer to top executive talent at the center of the technology industry.[3]: 156 [29] 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.[29]

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—beyond only computer systems, the market for which had been seeing continually shrinking profit margins.[3]: 156 [29] 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). Beginning in June 1998, Gateway bundled Netscape Navigator web browser on its systems preinstalled with Microsoft's Windows 95 and 98, the latter of which Microsoft themselves bundled with their own web browser, Internet Explorer.[30]

Gateway.net saw slow adoption rates—only 200,000 subscribers in early 1999—and was outage-prone. In February 1999, Gateway switched from Web America Networks to MCI WorldCom as their Internet backbone.[31] Also in that month, Gateway began offering one year of free Gateway.net service to those who purchased a Gateway PC worth $1,000 or more.[32] The base of subscribers increased threefold to 600,000 by October 1999 as a result of the promotion. In October 1999, Gateway switched their Internet backbone again to AOL, the latter taking over all operations of Gateway.net in exchange for a $800 million stake in Gateway.[33]

Ted Waitt resigned from his position as CEO of Gateway in December 1999. Weitzen was named president and CEO, while Waitt retained chairman status.[34] One of Weitzen's first acts as CEO was approving the divestiture of Gateway's Amiga International division, selling the corresponding Amiga patents and trademark rights to Amino Development Corporation, who later renamed themselves Amiga, Inc.[35]

2000–2004: Faltering and consumer electronics Edit

 
Gateway logo used from 2002 to 2004

A global downturn in the personal computer industry at the beginning of 2000 had a major negative impact on Gateway, whose dependence on the worst-hit markets of small business and home office buyers incurred significant quarterly losses. Weitzen also 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.[3]: 157  A price war instituted by rival Dell Computer Corporation led to Gateway posting a fourth-quarter loss of $94.3 million in 2000.[3]: 157 [36] Gateway's net profits fell to between $241.5 million and $316 million, while its stock dropped to $18 per share, down from $72 per share.[3]: 157 

In the beginning of 2001, Ted Waitt ousted Weitzen from and several other executives from the board of directors, reassuming the role of CEO and instigating an extensive restructuring of the company. Waitt shifted the company's bottom line away from service and software back to the sale of PCs to consumers and businesses, rehiring a number of executives that had been lost to the executive shuffle of late 1998.[37] Prices of the company's computers were massively lowered to make them competitive with offerings from Hewlett-Packard and Dell, while the company's employee base was 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. The manufacturing facilities in Malaysia, Ireland, and Lake Forest, California, were all shuttered; meanwhile most of the company's overseas subsidiaries were closed to limit the company's business to mainly within the United States. Also in 2001, the company moved to Poway, California. By the end of 2001, the company reported a net loss of $1.03 billion, while revenue fell to $5.94 billion.[3]: 157 

Gateway's sales dropped in 2002 to $4.17 billion, with the number of personal computer system units falling from 3.4 million to 2.75 million.[38] Gateway's American market share meanwhile shrunk from 9.3 percent in 1999 to 6.1 percent in 2002.[39] 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.[3]: 157 [40] Gateway reported a net loss of $297.7 million for 2002.[41] In the beginning of 2003, Gateway instituted another restructuring, closing 76 of its 268 Gateway Country stores and laying off 1,900 more employees in the process.[42]

In 2003, Gateway began pivoting toward the sale of consumer electronics, introducing 118 new products across 22 categories.[3]: 157 [43] These products included digital cameras,[44] flat-panel television sets,[45] MP3 players, standalone DVD players,[46] home theater PCs with built-in DVRs, and PDAs.[47] The company's remaining 192 Gateway Country stores were renovated to accentuate these consumer electronics.[48] Gateway meanwhile attempted to increase its enterprise sales by offering more general-purpose servers and network-attached storage devices.[49][50] In late 2003, the company shut down its Hampton facility, and restricted the output of the assembly and refurbishing lines of their North Sioux City and Sioux Falls facilities.[51] Manufacturing was moved largely overseas to Taiwan, with OEMs there manufacturing and assembling the parts for Gateway's notebooks and desktops.[3]: 157  By 2003's end, Gateway let go of 1,800 more employees and were down to just 6,900 on their payroll.[51]

Also in late 2003, the U.S. Securities and Exchange Commission filed fraud charges against three former Gateway executives: CEO Jeff Weitzen, former chief financial officer John Todd, and former controller Robert Manza. The lawsuit alleged that the executives engaged in securities violations and misled investors about the health of the company.[52] 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.[53]

2004–2007: eMachines acquisition, consolidation, and purchase by Acer Edit

In January 2004, Gateway announced that it had signed an agreement to buy computer manufacturer eMachines of Irvine, California, for $30 million in cash and 50 million shares of stock in Gateway.[54] eMachines was founded six years earlier as a joint venture between TriGem, Korea Data Systems and Sotec;[55] 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.[56]

By the time the acquisition was finalized in March, eMachines' payout increased to nearly $300 million, and as a result of the acquisition, Gateway reclaimed the number three spot among American PC manufacturers and the eighth largest PC manufacturer globally.[57] The president and CEO of eMachines, Wayne Inouye, replaced Tedd Waitt as CEO, the latter remaining chairman.[58] A month later, the company announced that would relocate to Orange County, California (where eMachines had been located); that it would shutter the remaining Gateway Country Stores—laying off 2,500 employees in the process; and that it would begin selling personal computers through third-party retailers, as eMachines had done in the past.[59] Gateway reduced another 1,000 jobs from their manufacturing and technical support facilities in Iowa and South Dakota by the end of the year. By this point, the company only employed 4,000.[60]

Inouye left Gateway in February 2006, by which point the company employed roughly 1,800—down from 7,500 at the start of his tenure.[61] In fall 2006, Gateway briefly revitalized its United States manufacturing presence with the opening of the Gateway Configuration Center in Nashville, Tennessee. It employed over 300 people in that location to assemble build-to-order desktops, laptops, and servers.[62]

In August 2007, Acer Inc. of Taiwan announced the acquisition of Gateway, Inc., for a US$710 million tender offer.[63] The acquisition was finalized in October 2007.[64] In the interim, MPC Corporation announced that it had inked 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.[65] This MPC deal was also finalized in October 2007.[66]

 
Gateway laptop at a Walmart in 2022

2020–present: Revival as an Acer label Edit

In September 2020, Acer revived the Gateway branding on laptops and tablets sold exclusively through Walmart. Acer commissioned Bmorn Technology, a Shenzhen based technology company, to manufacture and sell these Gateway branded laptops. The new line of laptops is a rebadging of Acer's existing EVOO-branded laptops. The laptops' sound systems are tuned in partnership with THX.[67][68]

See also Edit

References Edit

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External links Edit

  • Gateway (Acer Inc.) worldwide portal
  • Gateway (Acer Inc.) United States
  • gw2k.com at the Wayback Machine (archive index)
  • gateway2000.com at the Wayback Machine (archive index)

gateway, this, article, about, computer, company, other, uses, gateway, gateway, disambiguation, previously, gateway, 2000, american, computer, company, originally, based, iowa, south, dakota, founded, waitt, mike, hammond, 1985, company, developed, manufactur. This article is about the computer company For other uses of Gateway see Gateway disambiguation Gateway Inc previously Gateway 2000 Inc was an American computer company originally based in Iowa and South Dakota Founded by Ted Waitt and Mike Hammond in 1985 the company developed manufactured supported and marketed a wide range of personal computers computer monitors servers and computer accessories At its peak in the year 2000 the company employed nearly 25 000 worldwide 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 Gateway Inc Logo used since 2004FormerlyTIPC Network 1985 1987 Gateway 2000 Inc 1987 1998 TypePublicIndustryComputer hardwareComputer softwareEnterprise servicesFoundedSeptember 1985 37 years ago 1985 09 in Sioux City Iowa United StatesFoundersTed WaittMike HammondDefunctOctober 2007 15 years ago 2007 10 FateAcquired by Acer Inc brand revived in 2020HeadquartersIrvine California United StatesArea servedWorldwideProductsDesktop computersLaptopsServersConsumer electronicsNumber of employees25 000 2000 peak SubsidiarieseMachines 2004 2007 Websitegateway wbr com Contents 1 History 1 1 1985 1990 Foundation 1 2 1990 1995 Early growth 1 3 1995 2000 Major expansions 1 4 2000 2004 Faltering and consumer electronics 1 5 2004 2007 eMachines acquisition consolidation and purchase by Acer 1 6 2020 present Revival as an Acer label 2 See also 3 References 4 External linksHistory Edit1985 1990 Foundation Edit Gateway 2000 logo used from 1987 to 1998 A pizza box form factor desktop computer manufactured by Gateway circa mid 1990sGateway was founded as the TIPC Network by Ted Waitt and Mike Hammond in September 1985 Ted Waitt was the company s principal founder he was later joined by his older brother Norman Waitt Jr 2 38 Before founding the company Ted Waitt lived on his family s cattle farmhouse in Sioux City Iowa He had dropped out of two different colleges to work on the farm before landing a job at a computer store in Des Moines Iowa After nine months of experience gained on the job Ted had the idea to start his own computer reselling company that would allow him to sell to niche customers who needed systems in between the lower and upper ends of the personal computer market whose systems were either too limited in terms of speed and memory or too expensive with seldom used higher end features 2 39 3 153 Ted also found that educated salespeople could successfully sell computers to customers completely over the telephone impressing on him the idea that he could eliminate overhead by having a robust remote salesforce and impressive catalog 2 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 2 40 4 He was joined by Mike Hammond Ted s coworker who trained the latter to become a computer salesman at their previous job The duo s first products were software and peripherals for Texas Instruments TI 99 4A home computer advertised in various computer magazines The TI 99 4A had been discontinued in the previous year and was largely considered obsolete by 1985 TIPC Network charged their first customers with a membership fee of US 20 in order to flush the company with more start up capital 2 40 Owing to their products very low costs TIPC earned up to 100 000 in sales within the first four months beating out many of their competitors in the TI 99 4A aftermarket segment In early 1986 Ted s brother Norman Waitt was hired as TIPC s financial advisor in exchange for owning half of the company 2 40 That year the company began selling their own hand assembled computers locally on an experimental basis 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 2 36 3 154 Gateway 2000 was inspired to produce computer systems compatible with IBM s hugely successful Personal Computer in mid 1987 after Texas Instruments had announced a rebate program allowing customers to trade in their older home computer systems including the TI 99 4A in order to contribute toward a 3 500 credit on Texas Instruments PC compatible systems 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 The system was a success for Gateway 2000 with revenue increasing from 1 5 million in 1987 to 12 million in 1988 2 42 The company s first computer systems were assembled from parts supplied from other mail order companies 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 Because of this Gateway 2000 maintained a slim overhead and they were able to price their products below competitors 2 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 2 42 In the same year the company launched their first major advertising campaign taking out a full page advertisement in computer magazines for the first time to advertise the company and its products putting particular emphasis on their low cost and the company s Midwestern United States roots 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 3 154 1990 1995 Early growth Edit Gateway HandBook subnotebook computer manufactured beginning in 1992In January 1990 Gateway 2000 moved their headquarters from Iowa to North Sioux City South Dakota in order to take advantage of South Dakota s lack of income taxes 2 42 The company expanded their advertising campaign that year producing a number of humorous half and full page spreads featuring employees of the company including Ted Waitt in pastoral settings photographed by a local studio 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 2 42 43 Gateway 2000 posted 275 million in revenues by the end of 1990 2 36 Fearing that the company was growing too big for them to handle the Waitts and Hammond recruited a public accounting firm and poached six executives from rival computer manufacturers to plot the company s growth These executives in turn set up a number of divisions to promote innovation within the company including a marketing department with five employees a group dedicated to exploring new technologies with twenty employees an Action Group of ten executives whom Ted Waitt deferred to every two weeks and a Road Map Group to evaluate product development and branding choices In addition the company hired a media buyer to handle the company s advertising assets advertising and contacts with magazines and other mass media companies 2 45 In the summer of 1991 Gateway 2000 commissioned the construction of a 44 000 square foot manufacturing plant down the road from its North Sioux City headquarters expected to increase its manufacturing output by 30 percent That year the company also expanded their dealer channels beyond the individual buyer into fleet sales to enterprises Gateway 2000 offered such corporate clients training programs troubleshooting literature and more rigorous customer service While still a private company at this point Gateway 2000 elected to release financial results quarterly via press releases in order to project an image of legitimacy among corporate buyers 2 45 By 1991 s end Gateway 2000 posted 626 million in sales 5 14 Despite the added research and development divisions in 1991 the company admitted to falling behind their competitors in terms of innovation In an attempt to catch up Gateway 2000 began segmenting its marketing to appeal to customers with specific needs beyond value and price In 1992 they released the HandBook a lightweight subnotebook aimed at the executive market At the end of 1992 the company added 200 people to their support and sales departments increasing the number of total employees in the company to 1 700 3 155 By 1992 s end Gateway 2000 reported 1 1 billion in sales 6 The company had managed to avoid losses during a fierce price war ushered in by Compaq over the summer of 1992 7 becoming the leading mail order computer business in the United States 3 155 Gateway 2000 reported their first drop in revenue in the second quarter of 1993 which they attributed to quality control problems reported during the final quarter of 1992 and a stagnant roster of products 8 To remediate the latter the company released a notebook with a passive matrix color LCD and a newer subnotebook In order to stave off the rise of competitors Dell and IBM in the mail order market Gateway 2000 began pursuing markets outside the United States and planned to ramp up their corporate sales by the end of 1993 In service of the latter goal Gateway 2000 launched a division dedicated to handing major accounts poaching an executive from IBM to head this division Gateway s technical support staff doubled its headcount to just over 400 Gateway 2000 assigned each of their large corporate customers their own dedicated technical support associate 3 155 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 9 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 10 With their initial public offering the following December the company raised 163 5 million through selling 10 9 million shares 11 These shares represented a 15 percent stake in the company Waitt retained ownership of the other 85 percent of Gateway 2000 5 14 Along with financing the aforementioned two initiatives this infusion of capital also allowed Gateway 2000 to expand its product roster to include networking hardware such as fax modems peripherals such as printers and various software products 3 154 By the end of 1994 the company employed 5 000 and posted 2 7 billion in revenue 12 20 1995 2000 Major expansions Edit Left Gateway 2000 P5 120 120 MHz Pentium equipped tower computer manufactured by Gateway in around 1996 Right Gateway Solo 2200 166 MHz Pentium notebook from the same year In September 1995 Gateway 2000 commissioned the construction of a manufacturing facility in Hampton Virginia worth between 18 million to 20 million and an overseas manufacturing plant in Malaysia to serve computer buyers in East Asia 13 1 14 In August 1995 the company purchased an 80 percent stake in the Australian Osborne retailer 15 and in the following November Gateway 2000 established their first website on their first Internet domain gw2k com 16 By the end of the year Gateway 2000 posted revenues of 3 7 billion 17 In 1996 Gateway 2000 introduced the Destination 2000 an early home theater PC that used a large screen CRT television as its monitor It was intended for consuming home media content and multimedia software and came with a built in modem for Internet connectivity The Destination 2000 sold poorly and after several months Gateway began offering these systems at retail outlets such as CompUSA at deep discounts 3 156 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 Gateway Country Stores did not stock any of the company s products but had a number on display to allow customers hands on experience with Gateway 2000 computer systems customers had to order by phone or through the company s new website Their first location was in Tampa Florida 18 By 1999 Gateway 2000 had opened up over 140 Country Stores 3 156 In April 1997 Compaq Computer Corporation was in talks to purchase Gateway 2000 to bolster the former s presence in the mail order market 19 4 The deal was nearly inked with Gateway set to receive 7 billion before Waitt vetoed the acquisition that summer 20 Gateway 2000 themselves acquired two companies in the year the first being the Amiga Technologies subsidiary of Escom AG a German company that had filed for bankruptcy in the preceding year Announced in March 1997 21 the deal was finalized in the following May with Amiga International Inc incorporated as a subsidiary of Gateway 2000 in South Dakota 22 Gateway 2000 paid Escom 13 million for the patents to Amiga technologies the majority of which centered on multimedia capability 23 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 24 In late 1997 Gateway 2000 began phasing out the use of cows in their image in an attempt to project a more mature image to their corporate clients 25 Simultaneously the company formed Gateway Major Accounts a subsidiary focused on fleet sales to enterprise 3 156 By 1997 s end the company posted 6 29 billion in revenue and 1 billion in profit 26 In 1998 the company began dropping the 2000 from their moniker as the coming turn of the millennium meant that Gateway 2000 would soon sound antiquated 27 The company was formally reincorporated as Gateway Inc in May 1999 28 Also in 1998 Gateway moved their headquarters from South Dakota to La Jolla San Diego California both because Ted Waitt himself wanted to move in California and also to move the company closer to top executive talent at the center of the technology industry 3 156 29 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 amp T Corporation who was named president and chief operating officer of Gateway 29 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 beyond only computer systems the market for which had been seeing continually shrinking profit margins 3 156 29 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 Beginning in June 1998 Gateway bundled Netscape Navigator web browser on its systems preinstalled with Microsoft s Windows 95 and 98 the latter of which Microsoft themselves bundled with their own web browser Internet Explorer 30 Gateway net saw slow adoption rates only 200 000 subscribers in early 1999 and was outage prone In February 1999 Gateway switched from Web America Networks to MCI WorldCom as their Internet backbone 31 Also in that month Gateway began offering one year of free Gateway net service to those who purchased a Gateway PC worth 1 000 or more 32 The base of subscribers increased threefold to 600 000 by October 1999 as a result of the promotion In October 1999 Gateway switched their Internet backbone again to AOL the latter taking over all operations of Gateway net in exchange for a 800 million stake in Gateway 33 Ted Waitt resigned from his position as CEO of Gateway in December 1999 Weitzen was named president and CEO while Waitt retained chairman status 34 One of Weitzen s first acts as CEO was approving the divestiture of Gateway s Amiga International division selling the corresponding Amiga patents and trademark rights to Amino Development Corporation who later renamed themselves Amiga Inc 35 2000 2004 Faltering and consumer electronics Edit Gateway logo used from 2002 to 2004 A global downturn in the personal computer industry at the beginning of 2000 had a major negative impact on Gateway whose dependence on the worst hit markets of small business and home office buyers incurred significant quarterly losses Weitzen also 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 3 157 A price war instituted by rival Dell Computer Corporation led to Gateway posting a fourth quarter loss of 94 3 million in 2000 3 157 36 Gateway s net profits fell to between 241 5 million and 316 million while its stock dropped to 18 per share down from 72 per share 3 157 In the beginning of 2001 Ted Waitt ousted Weitzen from and several other executives from the board of directors reassuming the role of CEO and instigating an extensive restructuring of the company Waitt shifted the company s bottom line away from service and software back to the sale of PCs to consumers and businesses rehiring a number of executives that had been lost to the executive shuffle of late 1998 37 Prices of the company s computers were massively lowered to make them competitive with offerings from Hewlett Packard and Dell while the company s employee base was 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 The manufacturing facilities in Malaysia Ireland and Lake Forest California were all shuttered meanwhile most of the company s overseas subsidiaries were closed to limit the company s business to mainly within the United States Also in 2001 the company moved to Poway California By the end of 2001 the company reported a net loss of 1 03 billion while revenue fell to 5 94 billion 3 157 Gateway s sales dropped in 2002 to 4 17 billion with the number of personal computer system units falling from 3 4 million to 2 75 million 38 Gateway s American market share meanwhile shrunk from 9 3 percent in 1999 to 6 1 percent in 2002 39 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 3 157 40 Gateway reported a net loss of 297 7 million for 2002 41 In the beginning of 2003 Gateway instituted another restructuring closing 76 of its 268 Gateway Country stores and laying off 1 900 more employees in the process 42 In 2003 Gateway began pivoting toward the sale of consumer electronics introducing 118 new products across 22 categories 3 157 43 These products included digital cameras 44 flat panel television sets 45 MP3 players standalone DVD players 46 home theater PCs with built in DVRs and PDAs 47 The company s remaining 192 Gateway Country stores were renovated to accentuate these consumer electronics 48 Gateway meanwhile attempted to increase its enterprise sales by offering more general purpose servers and network attached storage devices 49 50 In late 2003 the company shut down its Hampton facility and restricted the output of the assembly and refurbishing lines of their North Sioux City and Sioux Falls facilities 51 Manufacturing was moved largely overseas to Taiwan with OEMs there manufacturing and assembling the parts for Gateway s notebooks and desktops 3 157 By 2003 s end Gateway let go of 1 800 more employees and were down to just 6 900 on their payroll 51 Also in late 2003 the U S Securities and Exchange Commission filed fraud charges against three former Gateway executives CEO Jeff Weitzen former chief financial officer John Todd and former controller Robert Manza The lawsuit alleged that the executives engaged in securities violations and misled investors about the health of the company 52 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 53 2004 2007 eMachines acquisition consolidation and purchase by Acer Edit In January 2004 Gateway announced that it had signed an agreement to buy computer manufacturer eMachines of Irvine California for 30 million in cash and 50 million shares of stock in Gateway 54 eMachines was founded six years earlier as a joint venture between TriGem Korea Data Systems and Sotec 55 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 56 By the time the acquisition was finalized in March eMachines payout increased to nearly 300 million and as a result of the acquisition Gateway reclaimed the number three spot among American PC manufacturers and the eighth largest PC manufacturer globally 57 The president and CEO of eMachines Wayne Inouye replaced Tedd Waitt as CEO the latter remaining chairman 58 A month later the company announced that would relocate to Orange County California where eMachines had been located that it would shutter the remaining Gateway Country Stores laying off 2 500 employees in the process and that it would begin selling personal computers through third party retailers as eMachines had done in the past 59 Gateway reduced another 1 000 jobs from their manufacturing and technical support facilities in Iowa and South Dakota by the end of the year By this point the company only employed 4 000 60 Inouye left Gateway in February 2006 by which point the company employed roughly 1 800 down from 7 500 at the start of his tenure 61 In fall 2006 Gateway briefly revitalized its United States manufacturing presence with the opening of the Gateway Configuration Center in Nashville Tennessee It employed over 300 people in that location to assemble build to order desktops laptops and servers 62 In August 2007 Acer Inc of Taiwan announced the acquisition of Gateway Inc for a US 710 million tender offer 63 The acquisition was finalized in October 2007 64 In the interim MPC Corporation announced that it had inked 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 65 This MPC deal was also finalized in October 2007 66 Gateway laptop at a Walmart in 20222020 present Revival as an Acer label Edit In September 2020 Acer revived the Gateway branding on laptops and tablets sold exclusively through Walmart Acer commissioned Bmorn Technology a Shenzhen based technology company to manufacture and sell these Gateway branded laptops The new line of laptops is a rebadging of Acer s existing EVOO branded laptops The laptops sound systems are tuned in partnership with THX 67 68 See also Edit Amiga portal Companies portal Iowa portal Los Angeles portal Gateway AnyKey Gateway netbooks Gateway Touch Pad Packard Bell a former rival that became a sister trademark to Gateway after Acer acquired it in 2008 List of computer system manufacturersReferences Edit Staff writer April 29 2004 Gateway to slash another 1 500 jobs NBC News NBCUniversal Archived from the original on March 9 2023 a b c d e f g h i j k l m n o Hyatt Joshua December 1991 Betting the Farm Inc Mansueto Ventures 13 12 36 38 Archived from the original on November 15 2002 a b c d e f g h i j k l m n o p q r s Pederson Jay P ed 2004 International Directory of Company Histories Vol 63 St James Press ISBN 9781558623248 via Google Books Walker Blair S May 13 1992 Silicon fields of dreams USA Today Gannett Company 1B via ProQuest a b De Zutter Mary January 23 1994 Computer Giant Born of Phone Fascination Omaha World Herald 1 14 via Newspapers com Norris Melinda January 19 1993 Gateway 2000 Expects Sales of Computers to Be Up 75 Omaha World Herald 11 via Newspapers com Coates James March 14 1993 No slowdown in PC price war Chicago Tribune 19 1 19 4 via Newspapers com Therrien Lois September 13 1993 Why Gateway Is Racing to Answer on the First Ring Business Week Bloomberg L P 3336 via ProQuest De Zutter Mary October 1 1993 Gateway 2000 Makes Foray To Ireland Omaha World Herald 16 via ProQuest Pope Kyle October 22 1993 Gateway to Offer 10 9 Million Shares at 13 to 15 Each The Wall Street Journal Dow Jones amp Company A9F via ProQuest Staff writer December 8 1993 Gateway 2000 s Share Offering Raises 163 5 Million The New York Times D4 via ProQuest Case John May 16 1995 The Wonderland Economy Inc Mansueto Ventures 17 7 14 29 via ProQuest Huber Lisa September 29 1995 PC maker heads here Daily Press 1 2 via Newspapers com Staff writer November 28 1995 Gateway 2000 Computer Maker Will Open Major Plant in Malaysia The Oregonian B1 via ProQuest Staff writer August 26 1995 Gateway 2000 expanding buying Australian company Sioux City Journal 6 via Newspapers com Staff writer November 9 1995 Biz Bytes Daily Press C6 via ProQuest Baker Ken February 4 1996 Opening the Floodgates Applicants Lining Up at Gateway Daily Press E1 via ProQuest Albright Mark March 21 1997 Tampa lassos Gateway 2000 Tampa Bay Times Times Publishing Company 1E via ProQuest Bournellis Cynthia April 21 1997 Compaq Gateway Merger Talks Begin to Surface Electronic News 43 2164 4 85 via ProQuest Lohr Steve October 7 1997 Gateway 2000 at Crossroads Star Tribune 1D via ProQuest Staff writer March 27 1997 Gateway buys bankrupt Amiga CNET CBS Interactive Archived from the original on May 16 2022 Staff writer May 19 1997 Gateway 2000 Completes Amiga Purchase Computer Business Review New Statesman Media Group Archived from the original on March 9 2023 McWilliams Gary August 12 1999 Gateway to bring back Amiga ZDNet Ziff Davis Archived from the original on February 1 2016 Afzali Cyrus June 19 1997 Gateway buys ALR Money Time Warner Archived from the original on June 21 2019 Britt Russ October 30 1997 Computers amp Technology Going Corporate Gateway Changes Spots Investor s Business Daily A1 via ProQuest Norris Melinda January 23 1998 Gateway 2000 Sales Profits Up for Quarter Omaha World Herald 18 via ProQuest Beatty Sally Evan Ramstead April 28 1998 Gateway 2000 Plans Shorter Name Longer Client Talks and No Cows Wall Street Journal Dow Jones amp Company B6 via ProQuest Staff writer June 1 1999 Recent Changes in Stock Listings The Wall Street Journal Dow Jones amp Company C12 via ProQuest a b c Williams Molly July 13 1999 Can a PC maker change its spots and turn a profit National Post C9 via ProQuest Kalish David E May 27 1998 Gateway Offering Choice of Internet Browsers Columbian Columbian Publishing Company 1 via ProQuest McWilliams Gary January 20 1999 Gateway Inc Sues to End Contract with Web America Wall Street Journal Dow Jones amp Company B6 via ProQuest Staff writer February 26 1999 Gateway Plans to Offer Free Net Service The New York Times 18 via ProQuest Richtel Matt October 21 1999 AOL Exceeds Expectations Agrees to Invest In a PC Maker The New York Times 1 via ProQuest Bliss Jeff December 9 1999 Gateway Founder Steps Aside Weitzen Leads The Oregonian B2 via ProQuest Staff writer January 1 2000 Gateway Sells Amiga Trademark to Amino Development The New York Times C4 Archived from the original on February 23 2015 Weintraub Arlene September 9 2002 Gateway Picking Fights It Just Might Lose Business Week Bloomberg L P 3798 52 Archived from the original on October 14 2002 Brooker Katrina April 30 2001 I Built This Company I Can Save It Fortune 143 9 94 102 Archived from the original on March 9 2023 McWilliams Gary March 18 2003 Gateway to Cut Work Force 17 Shut More Stores in Revamping The Wall Street Journal Dow Jones amp Company B5 via ProQuest McWilliams Gary January 6 2003 Under Gateway s Tree Another Shake Up Wall Street Journal Dow Jones amp Company A13 Velasco Diane January 25 2002 430 Workers Log Off at Gateway Albuquerque Journal A1 via ProQuest Musgrove Mike January 31 2004 Faltering Gateway To Buy EMachines Combination Could Be No 3 Computer Maker The Washington Post p E1 via ProQuest McWilliams Gary March 18 2003 Gateway to Cut Work Force 17 Shut More Stores in Revamping The Wall Street Journal Dow Jones amp Company B5 via ProQuest Spagat Elliot November 16 2003 Gateway s gamble Consumer electronics Telegraph Herald Associated Press B13 via ProQuest Mello John P Jr September 22 2003 Enter Gateway With a Vengeance Boston Globe C3 via ProQuest a href Template Cite journal html title Template Cite journal cite journal a CS1 maint multiple names authors list link Evangelista Benny December 15 2003 Changing channels Computer makers expand into flat panel TV market San Francisco Chronicle E1 via ProQuest Staff writer August 11 2003 Gateway Inc plans to make portable digital music player Deseret News C1 via ProQuest Ewalt David M June 30 2003 PDAs make inroads into businesses InformationWeek CMP Media 27 via ProQuest Staff writer May 10 2003 Gateway to remodel stores add products The Patriot News A6 via ProQuest Burt Jeffrey Evan Koblentz August 25 2003 Gateway Launches Storage Tools eWeek Ziff Davis 20 34 20 via ProQuest Mearian Lucas August 25 2003 Gateway Adds Storage Devices Servers to Infiltrate Data Centers Computerworld IDG Publications 37 34 14 via ProQuest a b McWilliams Gary October 27 2003 Gateway Shares Plunge by 24 On Dour Forecast The Wall Street Journal Dow Jones amp Company B6 via ProQuest Freeman Mike November 14 2003 Former Gateway Execs Accused of Fraud San Diego Union Tribune C1 via ProQuest Ex Gateway executives found liable in accounting fraud Los Angeles Times Associated Press March 9 2007 Retrieved November 28 2018 Freeman Mike January 31 2004 Gateway to Buy PC Maker eMachines San Diego Union Tribune C1 via ProQuest Staff writer March 31 1999 eMachines Is Fourth in U S Sales of PCs The New York Times p C25 Archived from the original on November 13 2021 Weintraub Arlene November 17 2003 Powering Up at eMachines How Did Wayne Inouye Turn a Reviled Money Losing PC Maker into a Winner Business Week Bloomberg L P 3858 77 Archived from the original on February 14 2004 via ProQuest McWilliams Gary February 2 2004 Gateway Buys eMachines to Boost Its Own Electronics Sales Wall Street Journal Dow Jones amp Company B1 via ProQuest Graves Brad and Andrew Simons April 5 2004 Gateway s Retooling Begins with Move San Diego Business Journal 25 14 1 via ProQuest a href Template Cite journal html title Template Cite journal cite journal a CS1 maint multiple names authors list link Flynn Laurie J April 2 2004 Gateway to Lay Off 2 500 with Closing of 188 Retail Stores New York Times C6 via ProQuest Chuang Tamara May 8 2004 Gateway picks Irvine for its headquarters The Orange County Register via ProQuest Staff writer February 9 2006 Gateway CEO Wayne Inouye resigns NBC News NBCUniversal Associated Press Archived from the original on May 25 2021 Staff writer June 1 2006 Gateway Selects Nashville Site for New Manufacturing Facility The Lane Report 18 via ProQuest Dean Jason Christopher Lawton August 28 2007 Acer Buys Gateway Bulks Up for Global Fight The Wall Street Journal Dow Jones amp Company B1 via ProQuest Staff writer October 18 2007 Acer Inc Gateway Shares Halted As Acquisition Is Set The Wall Street Journal Dow Jones amp Company B6 via ProQuest Nystedt Dan September 5 2007 Gateway to sell professional unit to MPC Network World IDG Publications Archived from the original on March 9 2023 Ferguson Scott October 2 2007 MPC Closes Deal for Gateway Professional Division eWeek Ziff Davis Archived from the original on March 9 2023 Ngo Allen September 10 2020 Gateway is back THX and Walmart revive branding for new affordable Ultrabooks and gaming laptop series NotebookCheck Archived from the original on September 13 2020 Salter Jim September 17 2020 We found out who makes Walmart s new Gateway laptops and it s bad news Ars Technica Conde Nast Archived from the original on September 16 2020 External links Edit Wikimedia Commons has media related to Gateway Inc Gateway Acer Inc worldwide portal Gateway Acer Inc United States gw2k com at the Wayback Machine archive index gateway2000 com at the Wayback Machine archive index Retrieved from https en wikipedia org w index php title Gateway Inc amp oldid 1172279582, wikipedia, wiki, book, books, library,

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