What happened to the gateway computers? Why the brand closed its doors

Gateway, the company that competed with Dell and Packard Bell in the ’80s and ’90s, fell out of favor and stopped production of its PCs pretty quickly. Originally based in Iowa, the company was founded in 1985, just a year after Michael Dell launched his PC reselling business. With the rise of the PC, Gateway quickly adapted, becoming a “white box” computer company, selling inexpensive PCs that it manufactured in-house.

After a fairly successful first few years, Gateway began to make some mistakes that began to multiply. One Reddit user, who claims to have worked with Gateway PCs at the time, noted that the cheap prices were due to the supply of spare parts. It is said that machines with the same name may have different parts, depending on the date of manufacture. This caused problems on PCs if they needed an update or repair.

David L. Farquhar, an IT professional who worked on Gateway PCs in his various jobs, attributed part of the company’s loss to the fact that it had poor customer support in the enterprise field. Although two blogs talk about the friendliness of consumer customer support, often guiding him and a colleague through setups, it has never managed to break into the enterprise market. Without this presence, like HP, Dell or IBM, the company could not survive the coming storm. This might explain why it never appears on lists of favorite tech brands.

Gateway began to struggle after the bursting of the dotcom bubble (which will pale in comparison to the inevitable bursting of the AI bubble), in line with the downturn of the computer industry as a whole in the early 2000s. Without a steady stream of revenue, when a price war broke out between Dell and Dell, the company posted a loss of $94.3 million in the fourth quarter of 2000. Profits also fell and its stock fell to $18.75, down from a high of over $80. In 2001, the company also reported more losses – now $1.03 billion – and more revenue declines, with massive layoffs (24,600 to 14,000) and plant closings around the world.

These losses proved particularly difficult to overcome since Gateway was unable to offset them through diversification, given that it had little foothold in the enterprise and laptop markets. Its TouchPad product was discontinued and its decision to launch physical stores began to become a burden, with overhead costs leading to the closure of almost 100 stores (19 in early 2002, then another 76 in 2003) out of 268. It began to diversify its portfolio in 2003, however, launching home theater PCs, PDAs and MP3 players.

Management, although the company was in decline, chose to purchase eMachines, a lightweight computer company that sold cost-effective systems. The 2004 purchase cost a total of $234 million, which was paid in the form of $30 million in cash as well as 50 million shares of Gateway stock. Thanks to eMachines’ rapid push into budget PCs, Gateway became the third-largest PC seller in the United States when the deal was finalized. eMachines’ CEO briefly became Gateway’s CEO, but left in 2006 after the brand suffered further consequences due to its pricing and management problems.

By 2007, Gateway had only 1,800 people left. With the PC industry rapidly evolving, Gateway was effectively left behind, as it failed to significantly differentiate itself in the laptop or business market. In August, the company was sold to Acer for $710 million.

Acer, now the owner of the Gateway and eMachines brands, didn’t do much with its purchase. What was there for its business operations was sold to MPC Corporation, which also went bankrupt in 2008, blaming problems integrating Gateway into its business. Acer eventually retired the Gateway and eMachines brands.

However, in 2020, the company brought Gateway back. The brand is now used to rebadge Walmart’s EVOO-branded laptops, working with THX on the audio. Gateway currently has some incredibly basic laptops, ranging from offerings powered by the ultra-budget Intel N100 processor to some with older AMD Ryzen mobile processors, like the 5700U. Unfortunately, the story ends with the brand languishing in obscurity – it didn’t even make our list of laptop brands to avoid.