WhereIsAtlas · Computers

Gateway

The mail-order PC maker from a South Dakota cattle town that shipped its computers in cow-spotted boxes, grew to nearly 25,000 employees, and was bought by Acer — which then revived the brand in Walmart

Acquired — Gateway, Inc. was founded as TIPC Network in September 1985 by Ted Waitt and Mike Hammond in Sioux City, Iowa, and became Gateway 2000 when it began selling its own IBM-compatible PCs by mail order. It moved to North Sioux City, South Dakota in 1990 and shipped its machines in white boxes with black Holstein spots. 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 in a $710 million tender offer announced in August 2007 and completed that October. The company is gone; the brand is not. Acer used Gateway as a sub-brand for several years, eventually retired it, and revived it in September 2020 on laptops and tablets sold exclusively through Walmart.

Gateway began as TIPC Network, founded in September 1985 by Ted Waitt and Mike Hammond in Sioux City, Iowa. The name referred to the Texas Instruments Professional Computer: the two sold software and peripherals for a machine that had been discontinued the previous year, advertised in computer magazines, and charged new customers a $20 membership fee to build up working capital. Waitt had dropped out of two colleges to work on his family's cattle farm before taking a job at a computer store in Des Moines, and he started the business with a $10,000 loan from his grandmother, Mildred Smith, working from the empty upper floor of his father's cattle brokerage. The venture earned up to $100,000 in sales in its first four months.

In early 1986 Waitt's older brother Norman was hired as financial adviser in exchange for half the company, and by the end of that year the business had been renamed Gateway 2000, Inc. and had reached $1 million in revenue. The company began assembling its own machines on an experimental basis in 1986; the real business started in mid-1987, when Texas Instruments announced a rebate program and Gateway 2000 decided it could sell a compatible PC for half the price. Its first complete system — dual 5.25-inch floppy drives, a colour monitor and a keyboard, sold by mail order for $1,995 — lifted revenue from $1.5 million in 1987 to $12 million in 1988.

The company's identity was built on where it was. In January 1990 it moved its headquarters from Iowa to North Sioux City, South Dakota, to take advantage of the state's lack of income tax. Its advertising leaned on the same theme, with a 1988 campaign built around the tagline "Computers from Iowa with a question mark" and pastoral photographs of employees. The most durable piece of that branding was the shipping carton: white with black spots, in the pattern of a Holstein cow. It was designed by a graphic designer rather than Waitt, and it had a practical virtue — a two-colour monochrome print job kept packaging costs down. The former North Sioux City headquarters complex was painted white with black splotches to match.

Growth was fast. Revenue went from $70.6 million in 1989 to $275 million in 1990, $626 million in 1991, $1.1 billion in 1992, $2.7 billion in 1994 and $3.7 billion in 1995. In October 1993 Gateway announced plans to go public to pay for a European subsidiary it had opened in Dublin and a push into corporate sales; the December initial public offering raised $163.5 million by selling 10.9 million shares, a 15 per cent stake, with Waitt retaining 85 per cent of the company.

Its route to customers was unusual for the time, and then it changed. In March 1997 Gateway opened the first of its Country Stores, in a suburb of Tampa, Florida: showrooms that stocked nothing, displayed a range of machines for customers to try, and took orders by phone or through the company's website — which had gone live in November 1995 on the domain gw2k.com. By 1999 there were more than 140 Country Stores. In April 1997 Compaq was in talks to buy Gateway 2000 for $7 billion, a deal that was nearly signed before Waitt vetoed it that summer.

The company also bought its way into other businesses. In 1997 it acquired Amiga Technologies from the failed German company Escom — announced in March, finalised in May, for $13 million — and incorporated Amiga International, Inc. as a South Dakota subsidiary, taking both the Amiga properties and the Commodore patents. It also bought the server maker Advanced Logic Research. Gateway never released a new Amiga; the plan was reportedly driven by a wish to be independent of Microsoft and Intel, and a prototype platform was developed and dropped under a later chief executive.

The turn came quickly. Ted Waitt resigned as chief executive in December 1999, staying on as chairman, and Jeff Weitzen took over. One of Weitzen's first acts was to approve the sale of the Amiga division: on the final day of 1999 Gateway sold the Amiga copyrights and trademarks to Amino Development Corporation, which renamed itself Amiga, Inc. Gateway kept the patents and licensed them to the buyer.

The PC market then turned against the company. It had peaked at nearly 25,000 employees in 2000, but its dependence on small-business and home-office buyers made it vulnerable to the downturn that year. Weitzen cut senior managers, began selling Gateway PCs through retailers including OfficeMax and QVC, and posted a fourth-quarter loss of $94.3 million in 2000, with the share price falling from $72 to $18.

In early 2001 Waitt removed Weitzen and several other executives from the board and took the chief executive's job back. He cut prices, discontinued products including the AOL-partnered Touch Pad internet appliance, and halved the workforce from 24,600 to 14,000 while closing manufacturing in Malaysia, Ireland and Lake Forest, California. By the end of 2001 the company reported a net loss of $1.03 billion on revenue of $5.94 billion. Sales fell again in 2002 to $4.17 billion, and its United States market share fell from 9.3 per cent in 1999 to 6.1 per cent. In 2003 it closed 76 of its 268 Country Stores, cut 1,900 jobs and pivoted towards consumer electronics, launching 118 products across 22 categories.

The end of that period also produced a legal coda. In late 2003 the US Securities and Exchange Commission filed fraud charges against three former Gateway executives — Jeff Weitzen, chief financial officer John Todd and controller Robert Manza — alleging they had misled investors about the company's health. Weitzen was cleared of securities fraud in 2006; Todd and Manza were found liable for inflating revenue by a jury in March 2007.

In January 2004 Gateway agreed to buy the budget PC maker eMachines for $30 million in cash and 50 million shares, a deal that closed in March with a payout of nearly $300 million and returned Gateway to third place among American PC makers. eMachines' chief executive, Wayne Inouye, replaced Waitt as chief executive. A month later Gateway said it would move its headquarters to Irvine, California, where eMachines had been based; shut the remaining 188 Country Stores, laying off 2,500 people; and begin selling through third-party retailers. On 29 April 2004 it announced a further 1,500 job cuts — about 40 per cent of what was left — leaving roughly 2,000 employees against a peak of nearly 25,000 four years earlier, and reporting its thirteenth loss in fourteen quarters.

Inouye left in February 2006, by which point the company employed about 1,800 people, down from 7,500 when he arrived. In the autumn of 2006 it briefly restarted American manufacturing with a configuration centre in Nashville, Tennessee employing more than 300 people.

The ending came in 2007. In August, Acer Inc. of Taiwan announced it would acquire Gateway, Inc. for US$710 million in a tender offer. The acquisition was finalised in October. In between, MPC Corporation agreed to buy Gateway's Professional Services Unit — the business that made servers, network-attached storage and workstations — for approximately $90 million, a deal also completed in October.

Acer kept Gateway and eMachines as sub-brands for several years, rebadging some of its own consumer machines as Gateways and keeping eMachines for the budget end. It discontinued eMachines in 2013, and the Gateway brand was later retired as well. Packard Bell, a former Gateway rival, became a sister trademark after Acer bought it in 2008. The Commodore patents that Gateway had acquired in 1997 with the Amiga business passed to Acer in the same purchase.

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 manufacture and sell them; the machines were rebadged versions of Walmart's existing EVOO laptops, with sound systems tuned in partnership with THX, priced from $199 to $1,199. The cow spots were gone by then. The North Sioux City complex that had been painted to match them was given a facelift in 2019.

Timeline

  1. Sep 1985 — TIPC Network: Ted Waitt and Mike Hammond start a mail-order business selling software and peripherals for a discontinued Texas Instruments computer. (Sioux City, Iowa)
  2. 1986 — Gateway 2000: The company is renamed, begins assembling its own PCs, and reaches $1 million in revenue.
  3. 1987 — The first complete system: A $1,995 IBM-compatible with dual floppy drives, a colour monitor and a keyboard lifts revenue to $1.5 million.
  4. 1988 — The advertising begins: A full-page campaign built on its Iowa roots runs, funded with 2.5 per cent of revenue.
  5. Jan 1990 — South Dakota: The headquarters moves from Iowa to North Sioux City, to take advantage of the state's lack of income tax. (South Dakota)
  6. 1990 — The cow spots: Shipping cartons are printed white with black Holstein spots, a two-colour design that also cut packaging costs.
  7. Dec 1993 — The public offering: Gateway raises $163.5 million selling 10.9 million shares; Ted Waitt keeps 85 per cent of the company.
  8. Nov 1995 — The website: The company puts up its first site on gw2k.com as revenue reaches $3.7 billion for the year.
  9. Mar 1997 — The Country Stores: The first showroom opens in Florida; stores display machines but stock nothing, taking orders by phone or online. (Tampa, Florida)
  10. Mar 1997 — Amiga Technologies: Announced in March and finalised in May, Gateway buys the Amiga business out of Escom's bankruptcy for $13 million.
  11. Apr 1997 — The Compaq talks: Compaq nearly buys Gateway 2000 for $7 billion before Ted Waitt vetoes the deal that summer.
  12. Dec 1999 — Waitt steps back: Ted Waitt resigns as chief executive, remaining chairman; Jeff Weitzen takes over.
  13. 31 Dec 1999 — The Amiga trademark is sold: Gateway sells the Amiga copyrights and trademarks to Amino Development Corporation, keeping the patents.
  14. 2000 — The peak and the turn: Employment reaches nearly 25,000, then the fourth quarter brings a $94.3 million loss and the share price falls from $72 to $18.
  15. 2001 — Waitt returns: Waitt removes Weitzen and takes the chief executive's job back, cutting the workforce from 24,600 to 14,000.
  16. 2003 — Consumer electronics: Gateway closes 76 Country Stores and launches 118 products across 22 categories; the SEC files fraud charges against three former executives.
  17. Mar 2004 — eMachines: Gateway completes the purchase of the budget PC maker for about $300 million, and Wayne Inouye replaces Waitt as chief executive.
  18. 29 Apr 2004 — The stores close and jobs go: All 188 Country Stores are shut and a further 1,500 jobs are cut, leaving about 2,000 employees against a peak of nearly 25,000.
  19. Aug 2007 — Acer bids: Acer Inc. of Taiwan announces a US$710 million tender offer for Gateway; the deal completes in October. (Taiwan)
  20. 2020 — The brand returns: Acer revives Gateway on laptops and tablets sold exclusively through Walmart, from $199 to $1,199. (United States)

Quick facts

Founded
September 1985, as TIPC Network, in Sioux City, Iowa
Founders
Ted Waitt and Mike Hammond
Waitt's start
a $10,000 loan from his grandmother, Mildred Smith
Renamed
Gateway 2000, Inc.; Gateway, Inc. from 1998
Moved to South Dakota
January 1990, for the absence of state income tax
Corporate identity
shipping boxes printed white with black Holstein spots
First company-built PC
a $1,995 IBM-compatible sold by mail order from mid-1987
Revenue
$70.6 million in 1989, $1.1 billion in 1992, $3.7 billion in 1995
IPO
December 1993, raising $163.5 million for a 15 per cent stake
Peak employment
nearly 25,000 worldwide in 2000
Country Stores
first opened in March 1997; more than 140 by 1999; all 188 closed in April 2004
Amiga
bought Amiga Technologies in 1997 for $13 million; sold the trademark to Amiga, Inc. at the end of 1999
eMachines
acquired in March 2004
2004 low
about 2,000 employees after cuts announced on 29 April
Acquired by
Acer Inc., announced August 2007, completed October 2007, US$710 million
SEC action
charges against three former executives in 2003; two found liable in March 2007
Headquarters
North Sioux City, South Dakota until 2004; Irvine, California, 2004 to 2007
Brand revived
September 2020, exclusively through Walmart, from $199

Lineage — where the name went

One mail-order computer company from a cattle town to a Taiwanese owner, and the brand that was retired and then brought back on Walmart shelves.

  1. 1985 — Ted Waitt founded Gateway 2000, Inc. (with Mike Hammond, in Sioux City, Iowa)
  2. 1985 — Mike Hammond founded Gateway 2000, Inc. (co-founder, and the man who trained Waitt to sell computers)
  3. 1986 — TIPC Network rebranded as Gateway 2000, Inc. (the company's original name was TIPC Network)
  4. 1990 — Gateway 2000, Inc. created The cow-spotted box (white cartons with black Holstein spots)
  5. 1997 — Gateway 2000, Inc. acquired Amiga International (bought Amiga Technologies out of Escom's bankruptcy for $13 million)
  6. 1999 — Amiga International sold Amino Development Corporation (the copyrights and trademarks, with the patents retained)
  7. 2004 — Gateway 2000, Inc. acquired eMachines (about $300 million, which moved the company's headquarters to Irvine)
  8. Jeff Weitzen served under Gateway 2000, Inc. (chief executive from 1999 until Waitt replaced him in 2001)
  9. 2007 — Acer Inc. acquired Gateway 2000, Inc. (a US$710 million tender offer, completed in October)
  10. 2007 — Gateway 2000, Inc. sold MPC Corporation (the professional services unit, for about $90 million)
  11. 2020 — Acer Inc. licensed the brand to Walmart (the Gateway name returned on laptops sold exclusively through the retailer)

Entities in this tree: Ted Waitt (person, 1985); Mike Hammond (person, 1985); TIPC Network (company, 1985); Gateway 2000, Inc. (company, 1985); The cow-spotted box (brand, 1990); Amiga International (company, 1997); Amino Development Corporation (company, 1999); eMachines (company, 2004); Jeff Weitzen (person); Acer Inc. (company, 2007); MPC Corporation (company, 2007); Walmart (company, 2020)

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)

Related: compaq · acer · amiga