RSSAcer + Gateway + Packard Bell to Create Global PC Powerhouse
By Scott M. Fulton, III | Published August 27, 2007, 9:34 AM
As officials from all three major companies involved confirmed to the press during the overnight hours in North America, global #3 PC manufacturer Acer has reached an agreement to acquire Gateway, America's #3 manufacturer, for $710 million.
And in a possibly contingent move, Gateway will use some of that immediate cash infusion to exercise its right to preclude Lenovo from acquiring Packard Bell from California investor Lap Shun Hui, who purchased it from NEC just last year.
Assuming the multi-part deal closes by this December as currently scheduled, the move is expected to double the number of PCs shipped under the Acer brand both to the US, where it's currently the #6 supplier, and to China where the Packard Bell brand enjoys prominence. If that happens, Acer could find itself wrestling for the first time with Dell for the global #2 position throughout 2008.
Ironically, Hui sold his stake in eMachines to Gateway in 2004 to help him mount a takeover of Packard Bell. Now, what remains of eMachines will be joined with the same company that owns the Packard Bell name.
Acer said its goal for 2008 is to sell 20 million PCs per year, while doubling its commitment to markets outside its traditional territories of Europe and Asia. This may actually be a conservative estimate. For 2006, hardware analysis firm iSuppli predicted Acer shipped 13.2 million PCs worldwide. But for the first quarter of 2007 alone, Acer officially toppled Lenovo for the world's #3 spot, shipping 4.2 million PCs in just that quarter.
Assuming the company were to maintain its virtually astronomical 45.8% annual shipment growth rate, as iSuppli projected in June, just Acer by itself could ship nearly 19.3 million PCs by the end of the year without Gateway's or Packard Bell's help.
By the standards of the PC industry in the late 1990s, today's Gateway is a company on life support. A few weeks ago, it reported its previous quarter's revenue was down about 8.5% annually. That revenue comes from three divisions: retail, professional, and direct sales. A staggering 73% of its revenue now comes from the retail segment.
But most of that business is on account of the eMachines brand; the Gateway brand holds up the other fourth of the company. Sales to business customers -- once Gateway's bread-and-butter -- amounted to a measly $171 million in the last quarter. This morning, Gateway said it's putting its professional division up for sale, though it's not known at this point who might want it - apparently not Acer.
Even if Gateway ends up having a bad year in 2007, next year it could still add another four to five million units to Acer's overall footprint. Packard Bell's strengths, meanwhile, are in Western Europe - mostly in France, where Gartner sees it as the #4 supplier - and in China. But estimates of that formerly private company's shipments to both those regions vary wildly, from as few as half a million to 2.5 million PCs shipped to Europe last year.
It isn't clear how to track mainland China as a market just yet, judging from the fact that its own business journals don't often agree with one another, though European sources believe China's PC market as a whole is growing at a 30% annual rate.
Dell's shipments meanwhile are declining, and will probably continue to do so as the company rebuilds itself and tries to emerge from what, for any other company, would be a crippling financial scandal. Still, Dell would have a long way to fall to meet Acer, with more than double Acer's global shipments in Q1 2007. Assuming Dell can continue to tread water, it may yet ship 36 million PCs worldwide this year.
End of an American icon
This morning's announcement brings to an end a long and difficult chapter in the history of Gateway, once considered one of America's manufacturing success stories. At one time, Gateway founder Ted Waitt was considered a potential American business icon, alongside Michael Dell and Bill Gates, having literally planted the seeds of his company in a barn outside Sioux City, Iowa.
During the height of the made-to-order "PC clones" boom of the 1980s, the former Gateway 2000 was known for its glossy, catalog-sized monthly inserts in Computer Shopper magazine. There, company employees including Waitt and other top executives would dress in sometimes ridiculous costumes, often re-enacting scenes from movies while showcasing their company's latest models.
At the time the company needed a ticket into big business sales, Waitt and his team brilliantly realized executives were judging the durability and reliability of systems not by the integrity of their software but by the feel of their keyboards. So Gateway invested a large chunk of money into manufacturing the AnyKey keyboard, which many enthusiasts continue to keep pristine to this day, even after over a decade of use.
In June of 2000, at the height of the proverbial "Internet bubble," Waitt was heralded by BusinessWeek magazine as "an unlikely visionary," with a goal of providing "an IT department for the masses." In that article, he admitted he courted the idea of a merger with Compaq, but broke off discussions after deciding he didn't want to work for anyone else. Just six months later, he would find himself attempting to resurrect his company with exactly the move Michael Dell is trying today: ousting the CEO he himself appointed, and re-assuming the title.
But Waitt was unable to combat Gateway's image problem. During the downturn of the US PC market, marketers struggled to move Gateway away from its jovial, barnyard motif into a more generic, forward-thinking corporate image.
The company would end up see-sawing back and forth between "Green means go" and "Mo-o-o-o," while the company's ticket into big business was quickly becoming its ticket out: Incompatibility problems between Gateway's keyboards and Windows led to customers discovering Gateway's newly outsourced customer service. Suddenly, the company became the symbol for the disconnect between suppliers and customers. No longer the friend of the everyman, Ted Waitt exited Gateway in 2005.
As the company's reliance upon its eMachines brand shows, there really hasn't been a Gateway computer company of any serious strength since then. Now, the company that briefly made the phrase, "Computers from Iowa?" a staple of PC geeks' T-shirts everywhere may, before the year is out, become absorbed into the foundation of a mercurial company whose true presence in America has yet to be felt.
M$ is just waiting for Dell to join them so they can purchase the whole thing and dominate the hardware market as well. Holy crap, that's some scary $h!t I just got goosebumps. LOL
Score: 0
|Dell? I wish someone would buy them and take them about 21 miles off shore and, oops, MAN OVERBOARD!!! I shamefully sold PB, Compaq, and Acer when I worked for CompUSA, although Acer was the lesser evil of the three. I also bought a, um, Dell, um, TV. I will pay these acts of stupidity! GS5 is right, MS is chomping at the bit, circling the fresh kill, reaching for their back pocket.
Score: 0
|PB must have had ESP when they named their PC Legend....it was legendary as the WORST PC ever. With Compaq a close 2nd
Score: 0
|From the article: "Incompatibility problems between Gateway's keyboards and Windows led to customers discovering Gateway's newly outsourced customer service."
What kind of incompatibility problems? All PC keyboards have always had either a PS/2 or USB connector (or both). They have never had any other type of connector. Even if it were one of the multimedia keyboards with the extra buttons like the Microsoft Natural Pro keyboard, the extra buttons would have been fully supported under Windows 95 or later.
Score: 0
|"All PC keyboards have always had either a PS/2 or USB connector (or both). They have never had any other type of connector."
You forgot about the AT connector, mine has one. :)
I think they are talking about driver software incompatibilities. Some of Gateway's keyboards have special functions like volume control and stuff like that.
Score: 0
|Yes, I'm aware that some keyboards have a larger PS/2 connector known as an AT connector (except for the size they look about the same). As for functions like volume control, my Microsoft Natural Pro keyboard has volume control among other special functions and it has never required any special drivers.
Score: 0
|diy
Score: 0
|DIY is probably the best choice for me, you and uncle Joe, but not for company looking to get 500 PC's for their office...
Score: 0
|maybe this will be a good thing
we get the best of the best when they mix it up
(of those names )
maybe the future coming pc will be at a price where you cant go wrong ?
one of me lap tops is a acer
i thought it was a good price for what it came with
I also dont think that this going to have any effect on others like asus (i have one of them too)
will be interesting see what positive things come out of this news
Score: 0
|My laptop is an Acer also and I have been overall happy with it. Before I bought it I had not heard much about Acer but I needed something now and the price was good for what I got, so I gave it a try.
Score: 0
|This is hilarious, really. I started buying Gateways because I could no longer get Packard Bells. And now Gateway is going to buy PB. What goes around, comes around.
Score: 0
|All the computer companies are disappearing through buyouts and mergers. Remember Packbard Bell merged with Zenith Data Systems and NEC years ago. IBM is out of the PC business now. HP bought Compaq. Pretty soon there isn't going to be much choice at all.
Score: 0
|And the biggest market share any company has is about 17%, and it drops off very sharply after that. Compare that to the auto industry. You have plenty of choice!
Score: 0
|Yeah, for now...I'm talking about where things are heading. Not sure what the auto industry has to do with it, nothing like the computer industry. We may still have a bit of choice with the hardware right now but it gets smaller every time these companies merge. As for operating systems look what a great choice we have there.
Score: 0
|I used to work at Gateway and trust me when I say Acer overpaid... by about $700 million. Only Rupert Murdoch pays this much for branded crap.
Score: 0
|$700 million isn't all that much. Google paid over a billion for Youtube.
Score: 0
|Packard Bell's a name i haven't heard in a while but I think it would be fitting for Dell to change its name to "Packard Dell" cause thats the road they are heading down.
Score: 0
|They withdrew from North America years ago and have only been doing business in Europe.
Score: 0
|The way of the world--there's just too many pc manufacturers today I suppose.
Score: 0
|I have a Packard Hell Pentium-70 running Windows 3.11.
I guess it works I have not started it up in a while.
Score: 0
|I had one of the Packard Bell computers with the so-called corner horizontal desktop case. It had an Intel Pentium 100MHz processor and 32MB of EDO memory. Once I successfully overclocked the processor to 133MHz it was blazing fast running Windows 98 SE. It was still in perfect working condition when I replaced it with something better.
Score: 0
|I haven't really worked with the Acer brand much since the mid-to-late 90's, but I have heard mostly positive things about their Tablet PC models.
As for Gateway, at my previous job, I experienced nothing but craptacular customer service and hardware failures from the machines we purchased. I think every computer they purchased over the three years I was there had at least a hard drive and/or motherboard replaced.
As for Packard Bell, well, they can stay in China for all I care. The last PB's I worked with back in the 90's made Gateway's hardware problems (above) seem like minor glitches.
EDIT: Oh, my bad, I forgot this is BetaNews... we're supposed to root for the underdog companies. So, uh, here's to hoping that Acer can kick Gateway and PB into shape! :)
Score: 0
|Don't drink the Kool-aid!! :p
Score: 0
|I thought Gateway was the underdog in this case, and Packard Bell the under-underdog.
Acer is the one that's #3 globally.
Score: 0
|*gulp* Oops, too late! :P
Score: 0
|Ah, but third place is still not the top dog, lol.
Score: 0
|A powerhouse of PC junk?
Score: 0
|Can I assume there will be no brand name changes across any of the product lines?
Score: 0
|Acerway Bell
Score: 0
|http://www.engadget.com/...teway-so-long-cow-spots/
"From the looks of the press release, it would appear that the Gateway (and eMachines) brands will continue under Acer's new "multi-branded company."
You'll find the press release here:
http://us.acer.com/acere...ates&crc=3207083074
Score: 0
|Nah, Acer Packway has a much nicer ring to it, lol.
Score: 0
|lol
Score: 0
|owned and hated all 3 brands especially packard hell
Score: 0
|Packaway Acer?
Score: 0
|My guess is that they'll use the Acer name as a subtitle. Maybe not immediately, but over time when they test the Acer brand recognition.
Acer PC (standard name for general PC users)
Acer Gateway PC (simplicity brand for non-savvy users)
Packer Bell by Acer (business?)
Acer eMachine (budget PCs)
Score: 0
|Oof.
Surely you'd learn after 2 bad computers..?
Score: 0
|My favorite name would be: Acer's Gateway to Packard Hell. It might be just a little too long though :D
I learned after my first Packard Bell not to ever buy another though, unfortunately, I didn't learn that NEC computers were distributed by Packard Bell until after I had purchased one (AAHHHH!!!)
Score: 0
|bought a pb before i knew better plugged a scanner into it about a month after i got it and it killed the mobo the store replaced it with an acer. the gateway was donated from a customer for my kids and actually it ran really well after i replaced the mobo, cpu, memory, hd, cd, and power supply...
Score: 0
|my pb was the first and only retail machine i've ever owned built my own ever since
Score: 0
|packard bell was the worst computer company ever and now with the money that gateway is going to get from acer they are going to buy packard bell.Think Gateway or should I say acer..stop them from buying from the worst computer company. They put old part in their computer, saying it was brand new when it was not. They has so many return that the company has to closed the company. They fraud the consumer when they brought a packard and found it has old part from other computer that was brought!
Score: 0
|i've caught hp and compaq reselling old machines as new also. run an unerase program on a supposed new machine every once in awhile you will get a nice suprise and find a lot of personal info from the first owner
Score: 0
|They're all the "same stuff different pile" under the stickers and ad campaigns. If Acer's buying power equates to their Gateway brand getting Asus boards in place of FIC or what have you, so much the better for those who like to see the Gateway name. Remember PC "makers" don't make they market. As I type this on my K-Tel type-o-matic machine...
Score: 0
|