Gateway Quits

Posted on July 25, 2008

Gateway said today that it would stop selling PCs through its Web site, focusing rather on selling through third-party stores and other online retailers.

Gateway has been selling PCs through partner retail stores since for nearly 5 years, but is now cutting direct online sales to consumers to cut costs and align its business model with its parent Acer. Gateway was acquired last year for $710 million in an effort to boost its presence in the US.

The transition away from direct sales will happen over the coming weekend, with online purchases coming to a halt on Saturday evening.

The change could help Gateway better compete with rivals HP and Dell. Also, since the indirect model has worked well for Acer, they are surely hoping that focusing on the same model can help boost Gateway sales.

By getting rid of Gateway’s online sales and perhaps some of the Gateway brands, Acer may be simply trying to consolidate the brands, which could increase Acer’s brand awareness.

Acer sells four brands — Acer, eMachines, Gateway and Packard-Bell — with Gateway products currently available through retailers in Japan, China, Mexico, Canada and the U.S.

Since the acquisition, Gateway has helped Acer boost its U.S. presence, where it was running neck and neck with Apple as the third-largest PC retailer. The combined company sold 1.3 million units, a 7.8 percent market share and a 49.9 percent increase over last year’s third quarter.