Data map: Employees on the assembly line (from: Sioux City Public Museum)
Although the Gateway brand has been hidden years ago, TechSpot editor Shawn Knight has a lot of respect for the few people who chose to drop out of school to start their own businesses.
Because not only did they create a lucrative business with novel ideas, but they also reshaped how countless consumers thought about and bought PCs.
In the early days of the business, Ted Waitt was helped by his grandmother Mildred Smith, who used her $15,000 proof of deposit to get a $10,000 business loan.
After getting the start-up capital, father Ted Waitt also allowed them to start the business in a mobile two-story farmhouse on his family ranch.
Despite the difficulties, the Iowa-based company has benefited from similarDellThe direct selling business model has been warmly welcomed by the popular from the very beginning. Then in just four months, they hit $100,000 in sales.
In February 1986, Ted Waitt’s brother Norm Jr. also officially became their partner and was primarily responsible for the company’s financial affairs.
Soon, the trio were selling custom PCs — more affordable than enthusiasts building them at home — while also renaming the company the Gateway 2000.
The following year, Gateway had a major breakthrough. As you can see above, they ran a rather unique ad in Computer Shopper magazine.
Although the main text is about the computer configuration, the background photo is of Ted Waitt’s ranch. Of course, the configuration of the Gateway 2000 A12 model is also quite cost-effective.
It is equipped with a 12 MHz 80286 processor (+$1000 upgradeable to 386 platform), 1MB RAM + 40MB hard drive, plus a 14-inch monitor, but the price is only $1995.
In a crowd of traditional technology-oriented advertising, Gateway can be described as a different approach, and it turns out that this is not a bad thing. Because consumers bought into the down-to-earth hype, it drove the company to $12 million in sales in 1988.
The rapid expansion in size meant that Gateway could no longer condescend to Ted Waitt’s farmhouse. The company has since moved to a 15,000-square-foot office building near Sioux Gateway Airport.
After acquiring more space and employees, the company continued to grow smoothly. In 1989, Gateway achieved $70 million in sales. Headquarters later moved to a 33,000-square-foot facility in North Sioux City, South Dakota.
The main reason is that the state has no personal or corporate income tax, which allows Gateway to save a lot of money and better compete with its rivals.
By the end of 1990, the company’s sales had grown to $275 million. It soared to $626 million a year later and crossed the $1 billion mark for the first time in 1992.
With Gateway’s ability to serve customers with a new-age business model, build PCs that meet buyers’ needs, plus excellent customer and technical support, it’s not for nothing that the company’s business is booming.
1997 Gateway 2000 Commercial（via）
Interestingly, the black and white “cow” packaging is not only highly recognizable, but also saves the company a lot of packaging and printing costs.
So much so that, for a while, the cow pattern was synonymous with Gateway — similar to Nike’s hooks and McDonald’s golden arches.
In 1996, the company launched the Gateway Country retail store concept. barn-style store, even more thanappleThe concept of directly-operated stores is five years earlier (leadingMicrosoftstore for more than ten years).
In-store employees knew exactly what it was selling, and after proving a hit, Gateway quickly expanded to more than 300 stores across the United States.
But in 1998, just before the arrival of the millennium, Gateway 2000 dropped the digital moniker from the company name and ushered in another twist in its fortunes — relocating its headquarters from the Midwest to San Diego, California.
Ted Waitt told the Sioux City Journal in 2007 that senior officials in San Diego never embraced the culture of values that drove Gateway in the first place, but were more oriented toward short-term money.
In October 1999, Gateway announced a strategic partnership with AOL to promote the company’s online services on all of its new computers.
The two-year deal pocketed Gateway $800 million. Around the same time, Ted Waitt stepped down as CEO and handed over to Jeffrey Weitzen to run the company.
Sadly, in an interview with The Wall Street Journal in late 2007, he thought the company’s choice of a successor was as foolish as their decision to move their headquarters to California.
Under the over-management of these guys, things got screwed instead. They only pursue the short-term gain of making the statements look better, only to damage the company’s balance sheet as a result.
So when the situation took a turn for the worse, Gateway didn’t have much capital to rely on, and ultimately ruined the company’s future.
In early 2001, Ted Waitt, who returned to Gateway, was trying to turn around a $94.3 million loss in the fourth quarter of 2000, just as the dot-com bubble burst.
To survive, he decisively downsized the company and tried to sell more general consumer electronics — such as digital cameras and plasmastelevision- but unfortunately failed to find a sustainable business model.
Gateway, which was desperately ill, acquired eMachines, a cheap computer maker, for about $234 million.
Then ‘Fire Chief’ Ted Waitt stepped down as CEO again, leaving eMachines CEO Wayne Inouye at the helm of the combined company.
The story that followed, was that Gateway never returned to the spotlight. In 2007, the company was sold for $710 million toAcer（Acer）。
Even if I still hear it occasionally, its physical body has long been taken away. What’s more, Acer hasn’t thought much about boosting or updating the Gateway product line over the years, just letting it sink into history.
Finally, Gateway co-founder Mike Hammond passed away in 2015 at the age of 53.