Taiwan's Acer to Acquire Gateway Computer

Struggling Gateway computer is being purchased for $710 million by Acer, a Taiwan-based computer maker. Gateway was a rising power in the computer industry in the early 1990s. It was started by college dropout Ted Waite in his father's South Dakota barn back in 1985.

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And the Taiwan-based company Acer announced it is buying the computer maker Gateway for $710 million. Gateway hopes this will help it become the world's third largest PC maker.

NPR's John McChesney has more.

JOHN McCHESNEY: For a long time the icon of humble beginnings for technology startups was the garage. Hewlett Packard and Apple in Silicon Valley are good examples. But for Gateway it was a South Dakota barn. College dropout Ted Waite founded the company there in 1985, and he made the black and white pattern of whole steam milk cows the company logo. It still is.

Gateway started out by selling direct to consumers in the same way that another college dropout, Michael Dell, did with his more successful Houston-based company. In 1996, Gateway began to open retail outlets.

Not a bad idea, says high-tech analyst Rob Enderle. But like many of Gateway's ventures, he says, poorly executed.

Mr. ROB ENDERLE (Analyst, Enderle Group): You saw Apple go after retail about the same time Gateway did. Apple's execution was high-traffic sites, paying whatever it takes to get in the right location. Gateway went after cheap sites and bad locations, and you see what the outcome was.

McCHESNEY: About this time Gateway set out to capture the flat screen television market - undercutting the prices of nearly everyone. The venture nearly succeeded but foundered because the retail sites failed to deliver.

Enderle says Waite had a short attention span and didn't let his company settle down on one strategy. But, Enderle says, the competition between Taiwan-based Acer and Lenovo promises to be very exciting.

Mr. ENDERLE: If there's any competition stronger than between a Taiwanese-based company and a mainland China-based company, I don't know where it is.

McCHESNEY: The deal will make Acer the third-largest PC producer and will give it a leg up on Lenovo in Europe.

John McChesney, NPR News, San Francisco.

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Correction Aug. 28, 2007

The audio for this story misplaces the headquarters of Dell, which is based in Austin, Texas.

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