Troubled Times at Gateway

conq writes "BusinessWeek has a piece looking at the future of Gateway in the light of the recent announcement of the departure of their CEO. The article revolves around the question: 'Will the sudden departure of Wayne Inouye and a slumping stock price leave the computer maker open to a buyout or takeover?'"

Stupid Cow

[garrett714]

Will the sudden departure of Wayne Inouye and a slumping stock price leave the computer maker open to a buyout or takeover?

Probably not. Nobody really cares about Gateway anymore... They aren't doing anything innovative and the only thing they've ever had going for them was that stupid cow.

Oh Boy, Oh Boy!

[zerocool^]

We just bought a backup system from them. 2x 2U servers with 12x500GB drives each, plus an autoloader tape system with 75 LTO 800GB tapes. We got the extra warranty et. al. because we're expecting to put the hard drives through their paces... I hope we still get warranty service in 3 years...

I hate to be negative...

[Spiffness]

But uh. Gateways have always sucked. So uh... suprise? Gateway has failed to do anything special for years, so simply being around in the 'make a crappy PC, set a low price, sell by the millions' game isnt enough. Remember Packard Bell?

Only 1 Choice: Liquidation

[reporter]

As the slowing sales of Dell computers indicate, the personal-computer market in the developed world (e.g. USA, Japan, and Europe) has reached saturation. Gateway represents surplus capacity. It always leads to only 1 conclusion: liquidation.

One unrealistic possibility for Gateway is to focus on the developing countries like China, but companies like Lenovo have the home-court advantage. Lenovo has close relationships with Taiwanese computer-chip manufacturers (who also sell their wares to the Chinese military in Beijing [geocities.com]). Lenovo can also exploit ultra-low-cost labor in China.

How can Gateway compete against Lenovo? Gateway cannot. IBM could not and sold its PC division to Lenovo.

$9M sales, $19M payoff?

[Jerry]

Gateway's profit after deducting Microsoft's payoff was only $9M.

They paid the CEO $19 and bonuses for one year's work before he bails.

But, probably the real reason why he couldn't make a go of it at Gateway was inteference from Snyder and the rest of the board.

Re:I hate to be negative...

[AKAImBatman]

But uh. Gateways have always sucked.

That's because you don't remember Gateway before they went mega-commerical. Many of us remember Gateway as being the mail-order company that always built PCs to the highest specifications of technology and quality. When everyone else was shipping 2x CDRom drives, Gateway was shipping 4x. When everyone was shipping 4 megs of RAM, Gateway was shipping 16. When everyone else had non-existant technical support, Gateway had excellent service that got your problem taken care of right away.

THAT is the Gateway I remember. The Gateway of today is nothing more than some other megacorp abusing the namesake of a company who knew how to build computers.

Is it time for acquiring Gateway ?

[bacchu_anjan]

Sun should acquire Gateway and get into the PC market. This would let Sun increase its enterprise reach -- not sure that Sun wants to get in touch with Consumers, though.

BR,
~A

Re:Second time buyers didn't return to Gateway

[King_TJ]

Yep! I'll throw in my own anecdote.

I was working in I.T. for a mid-sized company that was using exclusively Dell, but got irritated at the long hold times just to get parts replaced under warranty, and some billing mistakes they made. So they asked me to consider alternatives. We opted for Toshiba for some of our laptop purchases, and as an experiment, tried Gateway. They had a number of new slim-line desktop PCs out that they were selling through their "business division", pre-loaded with Windows NT 4.0 (which was what we ran at the time).

The first shipment arrived, and out of the box, they were having issues. When we installed certain software packages on them, they repeatedly crashed with the blue screen of death, and wouldn't reboot properly if you applied one of the NT service packs on them. Calls to Gateway technical support did no good, and I was referred to my local Gateway Country store. So there I was, a corporate customer, expected to hand-deliver these PCs to a consumer-oriented retail store and leave them there for "warranty service". I ended up bringing them just one of them to troubleshoot for us. First, they told me the hard drive was bad and replaced it. (Obviously, that didn't fix anything.) Then they swapped out the motherboard and blamed bad RAM as the problem. Nope! Finally, someone realized Gateway had just released a new BIOS for them that fixed the issue - but the new BIOS version wasn't posted to their web site yet for some reason, so I was told I've have to bring all of the boxes in to the store to let them flash upgrade them. (Umm, no. Not an acceptable answer!) So I just kept combing the web site until the upgrade was finally made publically available and got the systems updated myself.

After that fiasco, we never used Gateway again. Heck, even their web site was difficult to navigate to get drivers and BIOS updates compared to Dell.

GW service sucks

[Nimey]

I'm a university IT tech. Last month I had a fairly GW desktop PC's hard drive die. The drive was an IDE model. GW tech support not once but twice sent me a Serial ATA unit instead. That would be fine because the computer supports SATA as well, but they didn't send me a cable. After the first SATA drive was sent, I told the tech that I wanted either a cable or the correct drive. He refused me a cable.

Complaining to customer support got me a cable. Turns out the techs ordered the correct drive both times, but the warehouse was out of IDE hard drives so it failed silently and sent a SATA drive instead.

That said, the techs I chatted with (using their Java client) were professional (a bit too professional, if you know what I mean) and knew their jobs.

I'm not recommending my clients order GW machines for the time being. Our other major vendor for desktop PCs is Dell, and while their techs make me jump through the same hoops to get replacement parts, at least I get the right gorram parts sent to me.

Re:Stupid Cow

[Frumious Wombat]

I was always disappointed that the Cow boxes didn't have Cow-print computers inside as well. The trouble is going far enough that you've crossed the line from "tacky" to "camp". People would be trolling EBay for a genuine, 1996 P90 "Gurnsey" or "Hereford", instead of Mac Cubes.

Obligatory Gateway Bashing Story: Back around 1993ish, my boss bought a Gateway 486 laptop. He added a PCMCIA modem which never worked right. After some back and forth with heavily accented (Dakotan) tech-support, he finally got them to admit that they hadn't quite implemented the entire PCMCIA spec that was current at the time, meaning that it worked with many, but not all, adapters. That was our last Gateway.

Re:I hate to be negative...

[level_headed_midwest]

What model of Gateway do you have? I have a late-2002 vintage 600XL and I get the same "Is that a hair dryer?" response when the fan kicks on to cool off the 2.2GHz P4-M chip. My girlfriend has a mid-'03 400VTX with a 2.0 P4-M and it has the same fan noise. However, my brother's VAIO V505 had a 2.0 P4-M but made about no noise. I wonder if Gateway just got a lot of noisy (but relatively effective- my 600 runs at 60C and his Sony ran at 70C) fans?

Re:Fast Food

[TheRaven64]

I've often wondered why CEOs aren't paid a modest salary and a heap of shares that they are not allowed to sell for 5-10 years. This would encourage them to ensure that the company is in a good shape until about 5-10 years after they leave (at which time their successor would be trying to make sure the share price was still high after he retired).