Gateway was founded in 1985 and was one of the most successful PC companies in the US. Its sales quadrupled in 1990. By 2004, it was No. 3 in US market share behind Hewlett-Packard (HPQ) and Dell (DELL) and had 25% of the retail PC business. But, by 2007 Gateway was in such poor shape that Acer was able to buy it for $710 million. Gateway's failure has been blamed on several things, primarily its reluctance to enter the laptop business. Its share of the desktop business was strong through the early part of the decade, but it did not shift to portable computers as fast as its major competitors did. Gateway was also slow in entering the business of selling PCs to enterprises, a formula which drove most of the growth at Dell for many years. Gateway tried to diversify by moving into consumer electronics, but the profits were poor and this decision only hurt the firm's margins. GigaOm wrote when Gateway was sold, "The $710 million price tag is quite a comedown from the mid-1990s, when Gateway and Dell (DELL) were spoken of in the same breath and commanded mega-billion dollars in market capitalization."
Douglas A. McIntyre
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