Gateway buys eMachines

Gateway is hoping that its quarter-billion-dollar purchase of eMachines will help it turn around and make it the #3 PC maker in the United States. Seeing as eMachines is consistently #3 in terms of sales, eMachines plus anything is probably the #3 vendor.

The interesting thing to me is that eMachines is profitable. That wasn’t always the case.Gateway has been a victim of its own cost-cutting measures. Its PCs have never been known for being particularly trouble-free or reliable, but in surveys in the early ’90s, Gateway always ranked first or second in resolving problems. But like most vendors, the first thing cut when trying to lower prices was customer service.

I don’t doubt that Gateway’s PCs are better today than they were 10 years ago–most of its suppliers from that era are gone now–but shaking that reputation will be hard, and without good help, they’ll continue to struggle. Having worked on a number of Gateway PCs built in the late 1990s, I know they were problematic. The power supplies were too weak and the drivers for the sound and video cards didn’t always play well together. Two of my previous employers looked long and hard at Gateway, but one abandoned them because of difficulties getting them to run any OS other than the one it originally shipped with, and the other abandoned them in favor of Micron, who priced its offerings similarly but gave stronger power supplies for the price and generally just worked a lot more reliably.

I don’t know if the eMachines purchase will turn the company around or not. Certainly it will streamline things and allow Gateway to cut prices further on its own PCs. If Gateway can go back to providing the best support in the business and play up that angle, I think it has a chance of returning to its past glory. But time will tell.

2 thoughts on “Gateway buys eMachines

  • February 1, 2004 at 2:32 am
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    Since I worked (yes, that is past tense) at Fry’s Electronics recently, I have had quite a bit of exposure to the newer lines of eMachine desktop PCs. Their power supply units are much more robust than they used to be – seems to be a different manufacturer. It appears that switching from a white / beige case to a black / grey case resulted in them switching manufacturers of power supply units as well.

    I was working in the computer service dept., so I got to "product test" all of the returned merchandise. The least frequently returned brand of PC was eMachines. The house brand, Great Quality (GQ), is anything *but*. They’re the most frequently returned machines – probably something to do with the manufacturer: ECS. ECS is the same company that makes the *utterly horrible* PC-Chips boards. Hewlett-Packard came in a close second with their sister-brand, Compaq, being a distant third. In terms of volume, GQ and eMachines were the two biggest sellers – especially a $199 GQ with ThizLinux installed and a $399 eMachine with many hardware features and Microsoft Windows XP Home Edition.

    There were a *lot* of people that tried to get free advice on installing another operating system on their ThizLinux-configured PCs. Predictably, the "My computer doesn’t work so I’m returning it" was really "I don’t know what a device driver is and my modem doesn’t work in this pirated copy of Windows 98 I got from my buddy."

    And it’s true… retail does make you *despise* people. And I thought I was a cynical loon before!! I’m glad that was my first (and hopefully last) retail job…

  • March 12, 2004 at 9:32 am
    Permalink

    An interesting update to this – Gateway has now completed their acquisition of eMachines. This article at news.com has all of the details – including Ted Waitt stepping down as CEO. He has passed this duty on to former eMachines CEO Wayne Inouye


    Dustin D. Cook, A+

    dcook32p@htcomp.net

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