Catweazle 140 Grandad

Gateway currently holds about a 6% to 8% market share of PC sales in the US, and derives about 80% of its income from PC sales. After a lengthy period of unprofitability, the company has recently shown improvement, but is it enough to maintain its independence as a corporate entity? Cheryl Mayer at News.com thinks not.

Recent changes in direction for the company have see it acquire eMachines, close it's chain of retail stores and adopt the practice of selling its PCs through retail chains instead. Gateway focuses on sales to consumers, and has not had much success in selling to enterprises and other large volume customers. The change in direction saw the company return to profitability earlier this year, but it faces stiff competition from companies such as Dell and HP, and is operating in an environment where there is heavy competition with prices occurring. In particular, the low margins on notebook PCs which are currently in evidence may be reason to suspect that Gateways projections for sales and profits may be somewhat more optimistic than would be justified.

Mayer suggests that Gateway seems safe enough in the short term, but in the longer term would make an attractive purchase for candidates like Acer, Samsung, Lenovo or Sun Microsystems. Can it maintain independence? Are we likely to see the end of the PC that goes "Moo"? Time will tell.