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.