WhereIsAtlas · Gateway

What Happened to Gateway?

A mail-order PC maker from a South Dakota cattle town, famous for cow-spotted boxes, peaked at 25,000 employees and was sold to Acer for $710 million. The brand then outlived the company.

Gateway was founded as TIPC Network in September 1985 by Ted Waitt and Mike Hammond in Sioux City, Iowa, and grew into one of the largest PC makers in the United States on the strength of mail-order selling and cow-spotted boxes. It went public in December 1993, peaked at nearly 25,000 employees in 2000, bought eMachines in 2004 and was acquired by Acer Inc. of Taiwan for US$710 million in a deal announced in August 2007 and completed that October. The company is gone. The brand is not: Acer retired it and then revived it in September 2020 on laptops and tablets sold exclusively through Walmart.

A computer company from a cattle town

Most personal computer companies of the 1980s were founded near the industry they were joining. Gateway was founded in a town in Iowa where the founder's family kept cattle, and it turned that into a marketing position rather than hiding it.

Ted Waitt had dropped out of two colleges to work on the family farm, then took a job at a computer store in Des Moines and learned to sell machines over the telephone. In September 1985 he and Mike Hammond started TIPC Network, selling software and peripherals by mail for the Texas Instruments Professional Computer, which had been discontinued the year before. Waitt funded it with a $10,000 loan from his grandmother, Mildred Smith, and worked from the empty upper floor of his father's cattle brokerage [1].

The details are not incidental. A business built on telephone orders, magazine advertising and no shopfront could undercut a dealer, and the company's low overhead was its entire competitive advantage for years. It is also the reason Gateway became a case study in what happens to that advantage when the industry globalises and manufacturing moves overseas [1][4].

The cow-spotted box

In 1988 Gateway 2000 ran its first full-page advertisements, spending about 2.5 per cent of revenue on a campaign that played up its Midwestern roots. The tagline Waitt remembered was "Computers from Iowa with a question mark" — as in, who would expect computers from Iowa [1].

The idea reached its final form on the shipping carton: white with black Holstein spots. Waitt was clear that the design came from a graphic designer rather than from him; what he claimed was recognising it immediately. It also happened to be cheaper to print two colours than four, so the most recognisable thing about Gateway was also a cost-saving measure. The company later painted its South Dakota headquarters complex in the same pattern [1][9].

A brand built on where a company is from is a strange asset. It worked here precisely because the industry's assumption was the opposite — that serious computers came from California or Texas.

Mail order, then showrooms, then retail

Gateway sold by mail order and telephone through the early 1990s, and the model worked: revenue went from $70.6 million in 1989 to $1.1 billion in 1992, with no losses during the price war Compaq started in 1992 [1].

Then it changed its mind about how to sell.

In March 1997 it opened its first Country Store in the Tampa area: a showroom that stocked nothing, displayed machines so customers could try them, and took orders by telephone or through the company's website. By 1999 there were more than 140 of them. The website itself had gone up in November 1995 on gw2k.com [1].

The strategy resolved an obvious weakness in mail order — customers wanted to touch the product — while keeping the low-inventory economics. It also committed the company to a large fixed cost at precisely the moment the PC business began to commoditise.

The Amiga years

Gateway's least-known episode is its ownership of the Amiga.

In 1997 it bought Amiga Technologies out of the bankruptcy of the German company Escom: announced in March, finalised in May, for $13 million, with Amiga International, Inc. incorporated as a South Dakota subsidiary. The purchase carried both the Amiga properties and the Commodore patents [1][8].

Gateway worked on a new Amiga platform, reportedly encouraged by a wish to be independent of Microsoft and Intel. A prototype platform was built, and nothing shipped. One of Jeff Weitzen's first acts after replacing Ted Waitt as chief executive in December 1999 was to approve the sale of the division: on the final day of 1999 Gateway sold the Amiga copyrights and trademarks to Amino Development Corporation, a Washington company founded in part by two former Gateway subcontractors, which immediately renamed itself Amiga, Inc. Gateway kept the patents and licensed them to the buyer [1][7].

Those patents later passed to Acer in the 2007 acquisition. That is why the corporate descendants of Commodore's intellectual property are split between a Dutch company holding the trademarks and a Taiwanese PC maker holding the patents [1].

The collapse

The numbers turned in 2000 and never really turned back. Gateway had peaked at nearly 25,000 employees that year, and its dependence on small-business and home-office buyers made it more exposed than Dell, whose business was centred on corporate clients [1].

Weitzen cut senior managers and started selling Gateway PCs through retailers including OfficeMax and QVC. The fourth quarter of 2000 brought a loss of $94.3 million, and the share price fell from $72 to $18 [1].

Ted Waitt returned as chief executive in early 2001, removed Weitzen and several other executives from the board, and cut hard: prices down, the AOL-partnered Touch Pad appliance discontinued, the workforce halved from 24,600 to 14,000, and factories in Malaysia, Ireland and Lake Forest, California closed. The year ended with a net loss of $1.03 billion on revenue of $5.94 billion [1].

Sales fell to $4.17 billion in 2002 and the American market share went from 9.3 per cent in 1999 to 6.1 per cent. In 2003 the company closed 76 of its 268 Country Stores, cut 1,900 jobs and pivoted to consumer electronics with 118 new products across 22 categories [1].

The period also produced a legal reckoning. In late 2003 the Securities and Exchange Commission charged three former Gateway executives — Weitzen, chief financial officer John Todd and controller Robert Manza — with misleading investors about the company's health. Weitzen was cleared of securities fraud in 2006; Todd and Manza were found liable for inflating revenue in March 2007 [1].

eMachines and the last two years

In January 2004 Gateway agreed to buy eMachines, the budget PC maker, for $30 million in cash and 50 million shares. The deal closed in March with a payout of nearly $300 million and returned Gateway to third place among American PC makers and eighth globally [1].

eMachines' chief executive Wayne Inouye replaced Waitt as chief executive. A month later the company said it would move to Irvine, California, close all 188 Country Stores, lay off 2,500 people and start selling through third-party retailers. On 29 April 2004 it announced another 1,500 cuts — about 40 per cent of the remaining workforce — leaving roughly 2,000 employees, and reported its thirteenth loss in fourteen quarters. The previous peak had been nearly 25,000 [1][3].

Inouye left in February 2006 with the company at roughly 1,800 employees, down from 7,500 when he arrived. In the autumn of 2006 there was a brief return to American manufacturing, with a configuration centre in Nashville [1].

Sold to Acer, and a brand that kept going

In August 2007 Acer Inc. of Taiwan announced it would buy Gateway for US$710 million in a tender offer; the acquisition completed in October. In the interim, MPC Corporation agreed to buy Gateway's Professional Services Unit — servers, network-attached storage and workstations — for about $90 million, also closing in October [1][2].

What Acer bought was a distribution footprint and a name, and it used the name. Gateway and eMachines became sub-brands, with some of Acer's own consumer machines rebadged as Gateways and eMachines kept for the budget end. eMachines was discontinued in 2013, and the Gateway brand was retired too; Packard Bell, once a Gateway rival, became a sister trademark after Acer acquired it in 2008 [1][10].

That is not where it ends, because the brand came back without the company. In September 2020 Acer revived Gateway on laptops and tablets sold exclusively through Walmart, commissioning Bmorn Technology of Shenzhen to make and sell them. They were rebadged versions of Walmart's own EVOO machines, with sound systems tuned with THX, priced from $199 to $1,199 [1][5][6].

The contrast with the original is the whole point. Gateway was once a company that designed, assembled and supported its own computers and shipped them from South Dakota in cow-spotted boxes. The thing now carrying that name is a licence applied to someone else's hardware, sold in one retailer, with no factory, no engineering team and no cow spots [5][6].

What Gateway is a case study in

Gateway is the registry's clearest case of a brand outliving its company. The business ended in 2007 when Acer bought it. The name did not, because a name that sells can be licensed indefinitely by whoever owns it [2].

Two things are worth keeping separate. The first is the company's rise, which was a genuine commercial insight: sell capable PCs cheaply by mail, keep the overhead low, and make the low-cost origin part of the pitch rather than something to apologise for [1]. The second is its decline, which followed the industry's usual pattern — a market that became a commodity, a fixed cost base of showrooms, and a cost structure that could not survive falling prices [1].

Anyone who remembers Gateway remembers the box. That is a fair summary of what survived: not the company, and not the machines, but the branding that Acer still owns.

Entries in this story

Sources

  1. Gateway, Inc. — Wikipedia (2026-09-20) ↩
  2. Taiwan's Acer Plans to Acquire Gateway for $710 Million — CNBC (2026-09-20) ↩
  3. Gateway to slash another 1,500 jobs — NBC News (2026-09-20) ↩
  4. What Happened to Gateway, the Cow Computer Company? — VICE (2026-09-20) ↩
  5. Gateway is back: THX and Walmart revive branding for new affordable Ultrabooks and gaming laptop series — Notebookcheck (2026-09-20) ↩
  6. We found out who makes Walmart's new Gateway laptops, and it's bad news — Ars Technica (2026-09-20) ↩
  7. Gateway Sells Amiga Trademark to Amino Development — The New York Times (2026-09-20) ↩
  8. Gateway buys bankrupt Amiga — CNET (2026-09-20) ↩
  9. Cow spots no more: Here's what Gateway's eye-catching North Sioux City complex looks like now — Argus Leader (2026-09-20) ↩
  10. Acer sheds eMachines, turns to Gateway and Packard Bell for post-PC era — PCWorld (2026-09-20) ↩