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Acer to Acquire Gateway for $710 million 222

downix writes "On the way into work today, I heard about Acer buying Gateway. A bold move strategically, I wonder what consequences this will have for Gateway's employees and customers. As the purchase price was at $1.90 per share, those of us that purchased Gateway shares a few years ago are reminded just how far it has fallen."
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Acer to Acquire Gateway for $710 million

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  • Customers? (Score:5, Funny)

    by ThePolkapunk ( 826529 ) on Monday August 27, 2007 @11:33AM (#20372263) Homepage
    "I wonder what consequences this will have for Gateway's employees and customers."

    Gateway has customers?!
    • by eln ( 21727 ) * on Monday August 27, 2007 @11:37AM (#20372333)
      It's even funnier than that. According to the article, Acer only bought Gateway because Lenovo beat them to their first buyout target: Packard Bell!

      So apparently their goal was to buy the shittiest computer company in existence, but they were stymied in that goal so they bought the second shittiest. Personally, I was surprised to see that both Packard Bell and Gateway still existed, but I guess when the CEO of Acer finds extra change in his couch cushions, he has to spend it on something.

      • Re: (Score:2, Interesting)

        Personally, I was surprised to see that both Packard Bell and Gateway still existed,
        Packard Bell just doesn't sell in the United States anymore. They have some notebooks and some GPS devices and some USB-pen-drive-sized USB player. They got the reputation has being the crappiest computer company EVAR and were never able to quite live that down in the U.S. market.

        • Re: (Score:3, Informative)

          by o'reor ( 581921 )
          Despite the reputation, I bought a Packard-Bell notebook in January, and I've been quite happy with it so far. But then again, it's a notebook. No try to change various parts and therefore I did not hit compatibility problems with those parts. Linux (Mepis 6.0, Mandriva 2007, Fedora Core 6) installed flawlessly on that machine too.

          So maybe they've gotten better after all... just my 2c anyway.

        • by torrentami ( 853516 ) on Monday August 27, 2007 @03:52PM (#20375425)
          I guess Wang Computers wasn't available.
      • Re:Customers? (Score:5, Insightful)

        by Colin Smith ( 2679 ) on Monday August 27, 2007 @11:56AM (#20372605)
        Remove the cheapest competitors from the market and the average profit per unit increases.

      • by stu42j ( 304634 )
        Well, since Gateway bought eMachines in 2004, buying Gateway was a twofer! Two crappy computer companies for the price of one!
      • Re: (Score:3, Funny)

        by TekPolitik ( 147802 )

        So apparently their goal was to buy the shittiest computer company in existence, but they were stymied in that goal so they bought the second shittiest.

        They bought themselves?!?!?!

    • Gateway has customers?!

      They did. And most people liked their moo-cow store decor. IIRC, things went into the toilet around the time they started selling systems with Windows ME installed.

      Coincidence, bad karma or unfortunate timing?
      • Re:Customers? (Score:5, Insightful)

        by jcr ( 53032 ) <jcr.mac@com> on Monday August 27, 2007 @12:03PM (#20372693) Journal
        Their stores were what killed them. They spent a pile of money and put stores up everywhere, with little to no thought about whether any given location made sense or not. Apple's retail operation is a textbook case on how to do it right. Gateway's is a textbook case on how to botch it.

        • Re: (Score:3, Insightful)

          by Herkum01 ( 592704 )
          What killed them was when the owner/founder of the company handing the reins over to a IBM manager/friend. This friend convinced him that he knew exactly how to run a large business and ended turning it into a large corporate bureaucracy. At that point it became a company of bean counters( customer service agents who would hang up on the customer after 12 minutes), management cronies and corporate meetings to play the blame game.
          • by jcr ( 53032 )
            My statement and yours do not conflict.


            • Re: (Score:3, Funny)

              by heinousjay ( 683506 )
              My statement does not conflict with yours either.

              This is nice, it's like Slashdot only happy and sweet.
          • Re:Customers? (Score:5, Interesting)

            by Anonymous Coward on Monday August 27, 2007 @02:06PM (#20374229)
            From personal experience I can shed some light on that.

            Gateway before then had a good reputation for customer service. lifetime service and most of the reps you'd talk to would solve your problems, period. In fact if a Gateway Tech wanted to "Nuke" a system (format/reload), they had to get permission from a senior rep who would grill you on your troubleshooting thus far, approvals were only given to cases with merit. About that time (late 2001) Gateway owned and operated most of it's own call centers.

            Fast forward 6 months and one of their last call centers (actually one of their best) was being closed down in favor of outsourcers who got paid almost half of what we did. We had already experienced the aftermath of these "outsourcers", they had no real formal PC support training, worked on multiple "accounts" (not just Gatway, and not just PC support), and were having customers Format Reload as if it were the *only* troubleshooting step.

            Funny thing is a good percentage of our calls those last months were people calling back because they were told to Format Reload for an issue that didn't require it (say a defective soundcard/ speakers/ etc) and thus needed *more* support. Anyway, the main thing GW had going for it was it's good customer service, but that was done away with to "cut costs"....

            In retrospect, aside from getting laid off (along with 400 or so other people in the same town), Gateway used to be a great company to work for. They cared for their employees (as well as their customers). Some of the best benefits I knew of for the time, very good pay (though not extravagant), and incredibly good training. I can say that when we were laid off we were taken care of, we were all given 2 months, 3 weeks pay as a minimum severance *and* GW hired some folks for 2 months to help us hone our interviewing skills and find jobs (even hosted a job fair in the old call center).

            Sorry to be posted anonymously, but that big check at the end came with an NDA.

        • Re:Customers? (Score:5, Interesting)

          by demonbug ( 309515 ) on Monday August 27, 2007 @12:34PM (#20373147) Journal
          I had (and still have, though it is my "backup" - it works, but the battery lasts about 30 seconds at this point) a Gateway laptop. I was very happy with it. While traveling, I ran into the need for a car adapter. No Problem, I thought, I can just head over to one of those new Gateway stores they're putting up everywhere and pick one up!

          Nope. I find a store, ask if I can get a car adapter for my notebook, only to find out that Gateway stores don't actually carry anything, you can only order items from them. Not just power adapters (which I suppose aren't needed terribly often) - they don't stock anything. It was then that I realized Gateway was going to die - they spend all this money building stores all over the place, and then they don't even bother to stock them with a few useful items that their customers are likely to need. They basically just massively increased their costs without really offering any new or useful services. Brainy move!

          I do still like that laptop, though.
          • Re:Customers? (Score:5, Insightful)

            by mabhatter654 ( 561290 ) on Monday August 27, 2007 @01:09PM (#20373553)
            not having any ACTUAL COMPUTERS at the stores was the downfall I think. They had a lot of things like the Apple store, classes, training, but no repair, upgrade or hardware sales! It would seem to defeat the purpose of putting all the cool computers out there only to tell you to order it and wait 2 weeks for shipping. I also find my local "screwdriver" shop does this to. The point of being a computer store it to walk in and buy stuff!!! If you can't do that one simple thing, then I might as well go to BigBox where I can take home a crappy computer and take home the parts to upgrade it myself!!!
            • Apparently you've never been to a no-Computer store before. It wouldn't be a very good no-Computer store if it had computers there now, would it?

              And Gateway's no-Computer stores succeeded beyond their wildest expectations, selling record numbers of no-Computers!

              It's rare that a company can conceive and execute a new strategy like this so successfully. In fact, the Gateway no-Computer stores were SO successful, they even increased the no-Computer sales on the web sales side!

              By buying Gateway, Acer is hopin
          • Re: (Score:3, Insightful)

            by jollyreaper ( 513215 )

            I do still like that laptop, though.
            Since only a few companies actually make laptops and they're basically made to order for a given brand, just find out who made your Gateway when you're looking to replace, then see who they're building for. I love my Acer laptop even though the company's support ranks below Dell (yes, below Dell! That bad!). When it dies, I'm certainly going to find out who the original guys are building for then.
          • Re: (Score:3, Insightful)

            Don't forget that having a local presence made all Gateway purchases subject to both state and local sales taxes. This gave them a final cost disadvantage when compared to Dell that didn't have such tax requirements.
        • Re: (Score:3, Insightful)

          by garcia ( 6573 )
          Their stores were what killed them. They spent a pile of money and put stores up everywhere, with little to no thought about whether any given location made sense or not.

          It had to do with the fact that suddenly they had retail stores that still required you to do mail order to get the stuff *and* you now had to pay sales-tax!

          How that made any sense I'll never know. Back then, the reason for going to the mail order places was to avoid sales tax. Yeah, you took a hit on shipping but you got a near custom bu
        • Their stores were what killed them.

          Yup, they took a page from Compuadd's play book:
          "This direct sales thing is great,
          but what we really need is some brick and morter!"

        • I was a little fearful of Apple getting into the store business after Gateway failed. However Apple built up slowly. Plus Apple stores can be fun. I only felt like visiting a Gateway once, where I go back to Apple stores every few months to look at the new stuff (an sneak in an email now and then).
      • I though they had consumers

        say it with me kids, consumers
      • Re:Customers? (Score:5, Insightful)

        by AndyChrist ( 161262 ) < minus caffeine> on Monday August 27, 2007 @02:16PM (#20374337) Homepage
        Things went to shit WAY earlier than that.

        As early as 1997, they were known by computer support at my university as "Rapeway."

        They had built a reputation for quality and service, but then decided to abandon both and ride that reputation into the ground, selling inferior, unreliable hardware at the prices their name commanded them before their fall.

        Packard Bell did this, albeit with a stolen pseudo-reputation (along the lines of Rockwood or Kenford). Compaq did it. HP seems to be in the process of doing it, and Dell is flirting with it. The Big Three US automakers did it. It's a decades-long, proud tradition of failure.
    • I used to be a Gateway customer - when they were good...

      But then again I got a PDA in 2004 that was faster than my last Gateway computer. Guess they haven't been good for a while.
      • I have a Gateway laptop that I bought when Win95, Pentium 233 and a 5 gig HD were state of the art. It still goes, or did last time I fired it up a few months ago. Its replacement totally died and the one that came after that is undergoing surgery as we speak.

        Their customer service was great too, I had to send it back for repair once and they pretty much sent me a new machine with my old disk in it - I could tell because scuffs on the case & a bruise I'd put on the LCD were gone.
    • Re: (Score:2, Insightful)

      by philwx ( 789834 )
      I remember back in the early 90s when Gateway was a "rebel" clone company against the IBM PC's. They were the underdog with mail order customizable computers and fair prices. Unless my memory fails me.

      Then after a little success, in come the greedy execs that try to go for the lowest denominator in quality that can still pass for functional; now it's trash years later. Where do the execs go? They find another company to ruin.

      • by dattaway ( 3088 )
        Back then Gateways were the highest benchmarking computers and were well engineered. Their hardware, such as their keyboards were unique and had features that make them still valuable. They seem to have been buried under all the same commodity hardware badged under various brand names that's been flooding our market.
  • by Anonymous Coward on Monday August 27, 2007 @11:33AM (#20372267)
    what are they trying to do, build the suckiest computer evar?
    • they'd need to add Packard Bell to create the Unholy Trinity. then, the suckiest computer ever could be conceived.
    • by no_pets ( 881013 )
      Maybe they just think that cow hide boxes look cool.
    • Its pretty hard to catch up to the huge lead Packard Bell developed in the past. Truly the worlds first "semi-disposable" computer..
  • I gave up buying Gateway years ago. The machines were OK, but if something went wrong getting it fixed (and I was quite willing to pay) was a nightmare. Their administrators were incompetent, disinterested and I lost large amounts of time trying to get simple things done.

    This can only be a good thing for customers. Gateway: RIP - at last!

    • Tell me about it. My work computer had the screen die, and since it was out of warranty, we had to send it in to get it replaced. Somehow in the process of fixing the screen, they managed to screw up the harddrive.
      • Tell me about it. My work computer had the screen die, and since it was out of warranty, we had to send it in to get it replaced. Somehow in the process of fixing the screen, they managed to screw up the harddrive.
        Why would you send in the whole computer, when only the screen was dead. Unless it was a laptop, that may have been the stupidest thing you did all year.
        well, there was that other thing, but we won't talk about that
        • Its not a laptop, but it isn't a standard desktop. It's one of those stupid hybrids, where the whole of the computer (except peripherals/input) are built into the back/bottom of the screen. I hate hate hate them.
    • Somebody hasn't dealt with Gateway's service in a couple of years. I bought a Gateway MX6625 a couple of years ago because I got it at a steal. Really solid, well-designed notebook in general and that entire series of notebook was really easy to work on if something happened.

      Anyway, the original AC adapter that came with mine was defective and would overheat every once in a while. I call up Gateway tech support, get somebody in the US who speaks clear English, and within 15 minutes (counting hold time) I ha
    • I was in charge of PC buying for a trading firm back in 1994. Well, I was in charge, but the know-it-all manager overrode my recommendation of Zeos, and insisted on Gateway, which I knew to be poor quality and poor service. Here is the result (pasted from my whining on USENET):

      We have purchased 9 Gateways. 7 were 486's and 2 were Pentiums. Here is a list of the problems which have occurred.

      The chip fan in one of the Pentiums went out. Gateway sent a replacement. It took only about half an hour to hav

  • by RLiegh ( 247921 ) on Monday August 27, 2007 @11:36AM (#20372317) Homepage Journal
    Seriously, Gateway has always made really crappy computers. Compaq and Gateway are two brands I've always gotten burned on (weird, non upgradeable components that basically mean your box is worthless after a couple of years).
    • by 99BottlesOfBeerInMyF ( 813746 ) on Monday August 27, 2007 @11:57AM (#20372621)

      Seriously, Gateway has always made really crappy computers.

      I've never purchased a Gateway, but I do follow the trends in reliability, price, performance, and support from major vendors. Objectively, Gateway has not "always" made crappy computers. Instead they followed a common trend in computer manufacturing/sales. Within the first few years they made quality machines and had excellent support, both better than average for the price. Then, when they had a reputation and brand, the company executives cashed it in for quick profit by selling machines made more cheaply and poorly and counting on their reputation to get people to buy. The exact same thing happened with Alienware about a year before Dell bought them.

      Sometimes at a later date a company can reverse course to some degree. Dell's laptops, for example, have gained in quality and reliability over the last few years and are no longer the cheapest junk they can assemble using whatever is inexpensive today. Usually, however, with enough customers pissed off and vowing never to buy crap from Brand X again, it makes more sense in business to simply start Brand Y and count on consumers do not do any homework or even look at consumer reports instead of the TV ad where the guy says its a good deal.

    • Not so. My first three computers (circa 1992, 95, and 98) were all Gateways and all excellent machines that I had very few problems with. And on the rare occasions where I had problems, their service department was top-notch. You could call and speak to someone who spoke English, was knowledgeable and friendly.

      This all changed about 8-20 years ago. I'm not sure if they just lost their way, had to cut too many corners to try and compete with Dell or just got too big for their britches, but it's simply

      • [blockquote]My first three computers (circa 1992, 95, and 98) .... This all changed about 8-20 years ago [/blockquote]

        So, it was good between 92 and 98, but bad between 87 and 99?
    • Um, not really. My first two Intel-based computers were Gateways and I had nothing but good luck with them. I also found nothing particularly proprietary on them (unlike Compaq). I upgraded memory, disk, cards and even processors and never had any problem with it.

      My first one ran for over five years before the power supply finally gave out. I decided it was time to build one myself, so I gave it to a co-worker for his kids to play with. He replaced the power supply and it worked for another three years befo

    • Re: (Score:3, Interesting)

      by massysett ( 910130 )
      weird, non upgradeable components that basically mean your box is worthless after a couple of years

      That's true for Dells too, which has me wondering if it is true for all systems from vendors of any size.

      I had a Dell desktop. The motherboard was made just for Dell. The motherboard connectors for the USB, front-panel sound, hard-disk LED, etc. were all non-standard. Instead of having separate little pinouts and wires for each one, the system used a single ribbon cable to connect all these ports and LEDs to t
  • by bstorer ( 738305 )
    Amazing. Considering the Acers I've used, it's shocking that they're still around, let alone capable of buying another company!
    • Acer ranks 4th in the world with revenues around $15 billion. They are the largest vendor in Taiwan. They might shoot up to three with this purchase. Remember that Gateway just bought eMachines, which still has decent sales, and that they are in the process of buying Packard Bell, which still does a good bit in Europe.
      • Dang. I certainly didn't know Packard Bell was still around. My first "IBM Compat" was a Packard Bell (486SX 20mhz, 2mb ram, 80mb hard drive). Worked fine for what it was, but if anyone thinks that a Gateway or Dell uses proprietary non-upgradeable stuff, you have NO IDEA how bad Packard Bell was. Non-standard motherboard form factor, non-standard powersupply, non-standard CPU upgrade path (the CPU was SOLDERED onto the board - if you wanted to upgrade you plugged your new CPU into the "extra" CPU socket
    • I don't know if you know this but Acer is HUGE in Asia.
  • hmm.. since emachines merged with gateway, what does this mean for emachines? I'm a bit surprised that gateway could be bought for $710 million.
    • I know for sure that Apple has billions of cash in the bank (well, liqued assets in general). How can it be that the fourth biggest by market share could easily buy the third? Has Gateway been selling machines at a loss? heh.
  • by Stanistani ( 808333 ) on Monday August 27, 2007 @11:41AM (#20372397) Homepage Journal
    They have the potential to be the next Packard Bell. []
  • by CodeShark ( 17400 ) <{ellsworthpc} {at} {}> on Monday August 27, 2007 @11:50AM (#20372519) Homepage
    What most people don't realize is that for years Acer was one of the largest sources for COMPONENTS, not finished systems -- so they tend to weed out poor components first, resulting in better systems at the end of the assembly chain.

    So [as a former Acer reseller / small business consultant who moved more into data engineering and away from hardware by choice, not necessity] I would have to say that "this figures". Why? Because I could always upgrade the Acer machines I bought/sold to my clients, and in all of the sites I ever sold to and supported I think I had one machine failure before "end of cycle", i.e., about 3 years later when the cost benefit ratio for a new machine becomes higher than the cost of maintaining an old one. Versus the Gateway, Packard Bell, or even Dell reputation for crap service.

    Hmmm. I wonder if this might actually make Gateway stock worth *something* again....

    • by deniable ( 76198 )
      I've always hated their desktops. I had a lot of trouble, but then most of the low-end consumer PCs aren't a lot of fun.

      They do make reasonably good and damn cheap notebooks. My notebook, when I actually use it, is an Acer.
  • Dinosaurs mating... (Score:5, Interesting)

    by jht ( 5006 ) on Monday August 27, 2007 @12:03PM (#20372695) Homepage Journal
    This takes two companies with minimal brand equity and merges them to provide better buying power and a lower cost of goods. The fact that Gateway was worth only $710 million despite being the third-largest vendor here in the US should say something right there. And it's not good.

    Market Cap of some major US PC vendors:
    HP 125.68B
    Apple 115.8B
    Dell 61.63B
    Gateway 676.29M

    See an interesting trend? Gateway would be pocket change to any of those bigger companies. Basically, they died in retail, were taken over from within by E-Machines (even though Gateway bought E-Machines, the execs from E-Machines wound up in charge - just like when NeXT was bought by Apple) and stabilized just enough to turn into the company into bait for Acer.

    Goodbye, Gateway...
    • I find it interesting that despite the prevailing mentality that Apple is a "niche market player" - they've got such a strong market cap, with no signs of it declining.

      Nay-sayers will scream that "It's only because they sold tons of iPods!", but don't forget that they're not all THAT far from matching HP's market cap, and Apple doesn't even manufacture their own printers OR scanners anymore! (On the other hand, HP did license the iPod from Apple for a while!)
      • Remember, though - part of what builds stock value is the perceived upside of the company business. Apple is strong because even though their market share is small, their growth is higher than most and they dominate the music player biz and have been expanding with success whenever they go (iPhone, anyone?). HP is driven by their printer business and their services besides PC, and Dell has volume and low costs. Gateway, though, has nothing unique. So analysts look at them and say "meh" - ergo a low valu
  • gateway isn't that bad. what always attracted me too them was products i couldn't get anywhere else (like the pre-windows excellent gateway nomad subnotebook)

    so lately, that has been the gateway tablet [] (heavy, but cheap... go ahead, find me something cheaper and prove me wrong, you can't)

    it's fun to play civ4 on a sub-$1000 tablet pc, as many a curious onlooker can attest to. made possible by gateway

    thank you gateway
  • Gateway - pre eMachines achieved their low costs by buying everything on spot markets. So today's PC's wasn't the same as yesterday's or tomorrows. What you got was what they managed to source at that single moment. This made support damn near impossible. And of course QA was terrible. What the guys at eMachines did was deploy only a small handful of models at a time and they were all standard and compliant. I rather like by eMachines boxes and I hope they continue.
  • I used to relish the old Computer Shopper magazine, back when it was the size of a phone book. In the middle thereabouts was always a multi-page spread for Gateway. They used to be about the cheapest mainstream source for PCs and I used their ads as a benchmark for what the going price was for things.

  • Huh? What's next, Fujitsu-Siemens buying Dell? Or Packard Bell buying HP?
    It pretty funny when company generally known for producing inferior products buys company producing higher quality stuff. But it happens. Apple, maker of punny Xservers and gadgets could easily buy Sun Microsystems with their powerful 16-Opteron cores servers and massively multithreaded CPUs.
  • Old relationship: Acer builds computers, Gateway rebrands them, and then trashes its reputation by poor service

    New relationship: Acer builds and sells computers as Gateway, avoids trashing its relationship to the same degree by poor service, ???->profit.

    It's an incremental upgrade for the consumer. The Gateway brand is still valuable because it's recognized and most people don't think of it as terrible, not in the least part because most people have had problems with their better-rated (Dell, Compaq) bra
  • It is very interesting to look at the Gateway's share price history - as the summary suggests. Stock symbol GTW []. Click on the 10 year view to see that, at the height of the dot-com days, it was trading at $60-$80. Since the bubble has burst, it has been steadily been below $10. Today at $1.80.
  • 2 things (Score:4, Interesting)

    by kilgor3 ( 1148239 ) on Monday August 27, 2007 @12:40PM (#20373223)
    Are they outsourcing the jobs? and I hear a lot of Gateway bashing here. It's understandable, but 8 years ago I bought a gateway. It FINALLY died about 2 weeks ago. This computer handled being on almost everyday, over 150 linux installs a few windows installs and has NEVER been cleaned out with a vacuum or anything. It's dirty as hell and I'm affraid to open it to fix the damn thing. I primarily used this computer for 2 things; 1) Testing all the latest linux distros 2) Downloading my pr0n, warez and music. I think it would still work if I popped another hard drive in. So all in all I had an AMAZING Gateway experience. I wouldn't buy another pre-made PC now that I use laptops and build my own PCs. I needed the Gateway for school at the time and didn't have the time to build my own.
  • ...finally somebody thought of the cows! ;-)
  • Who here lost all (or at least all remaining) faith in Gateway after they started doing commercials with the ponytail dude who was their CEO? That guy just screamed "Don't trust me!" in a way I haven't felt since the marketing weasel left my company.
  • Seriously, Apple buys Gateway and there is great buzz. Gateway may not have the greatest reputation at the moment but a lot of people out there owned a Gateway computer at one point or another. They didn't always suck.

    So Apple goes into the PC business selling Windows boxes as Gateway and works on improving the Gateway reputation. Then they make Gateway computers the only "PC's" that you can order OSX on. Now people who just wouldn't buy a Mac no matter what can buy a PC running a rebranded OSX (an
    • Apple already bases its entire product line on Intel x86 systems, i.e., IBM PC compatible, i.e., PCs. Why should apple buy some company just to be able to do the exact same thing that it is already doing for the past year or so?

Adding manpower to a late software project makes it later. -- F. Brooks, "The Mythical Man-Month"