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 companies, utilizing a sales model copied by Dell, and playing up its South Dakota roots with low-tech advertisements and shipping computers in spotted boxes patterned after cow markings (specifically, those of Holstein cows). 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 in 1998.

Gateway bought Amiga computer assets in 1997 and in 2000 they sold the Amiga brand.

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. None of these efforts were particularly successful, and Gateway continued to lose market share and suffered major losses. By April 1, 2004, Gateway had announced that it would shut down its 188 remaining stores. The last day of operations for most of the stores was April 9, 2004.

On January 30, 2004, Gateway purchased low-cost PC maker eMachines, for $30 million in cash and 50 million shares of stock, valuing the deal at approximately $262 million with announced intentions to keep the eMachines brand. Gateway had hopes that eMachines' outsourced manufacturing process would help cut costs and that their profitable retail business would help Gateway's bottom line. 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 of 2006 when J. Edward Coleman was brought in as the new CEO.

Despite its more low tech image, Gateway has long 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. Although the company enjoyed some success in gaining market share from traditional leaders in the space, the limited short-term profit potential of the product line 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.

Current products

See also: List of past Gateway products

Hardware

Gateway sells to specific markets including Home & Home Office, Small Business, Medium & Large Business, Government and Education. They do not use brand names to market products, instead using product models. They currently(as of 09/25/06) market a range of laptop products for the home markets including the NX100X, CX210, NX260X, NX560 and NX860 series. ^[1] They also market, as of 09/25/06, a range of desktops including the DX420, FX510, and Profile 6 series. These products are advertised as affordable and productive computers. The Profile 6 is an All-in-one system similar in design to Apple's iMac G5. Their lowest priced system is the DX420B Series, with a monitor sold separately. ^[2]

Gateway currently sells seven LCD-based computer monitors as of 09/25/2006 including one 15" model, two 17" models, three 19" models, and one 21" model. Some include USB ports. ^[3] Shortly after the dot com bubble, Gateway entered the consumer electronics market, manufacturing digital cameras and other devices. None of these products were successful, and Gateway has stopped production and sales of them as of 2006.

Gateway also markets "Convertible Notebooks", notebook PCs combined with tablet PC technology including handwriting recognition with a stylus much like a personal digital assistant (PDA).

Software

Gateway currently ships Microsoft Windows XP as the operating system of choice for its computers, including Media Center and Tablet editions of Windows XP. Gateway also sells "bare-bones" computers without any pre-installed software upon request but not through its website yet. On the computers that come with Microsoft Windows XP, 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.

Corporate affairs

Customer support

Gateway customers have reported offputting experiences with the company's customer support , particularly with their digital cameras ^{[4] [5]} Service professionals report that parts and technical information are simply not provided for Gateway products, making third party post-warranty repairs difficult.

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[1], 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 Computer, Lenovo, Sony and Toshiba. In particular regions and outside the United States, Gateway competes with Acer, Fujitsu and Packard Bell.[2]

Organization

A Board of Directors of six people runs Gateway. Richard Snyder, former interim CEO, serves as Chariman on the board. Other board members include George Krauss, Douglas Lacey, Charles Carey, Joseph Parham, Jr and Quincy Allen. 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 or Directors announced the appointment of J. Edward Coleman as chief excutive 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.^[6]

References

1. ^ Gateway.com — Notebooks and Laptops
2. ^ Gateway.com — Desktops
3. ^ Gateway.com — PC Monitors/Accessories
4. ^ Digital Camera HQ - Gateway DC-T50 review
5. ^ eBay Reviews & Guides — Gateway DC-T50 5.0 megapixel
6. ^ Michael Kanellos (2006-09-07). Gateway gets a new CEO--again. CNET. Retrieved on 2006-09-08.

See also

• List of Gateway products
• List of past Gateway products

External links

• Gateway homepage