Acer: 3rd Largest PC Maker in the World

That is out of no where right? Well I guess not with their acquisition of Packard Bell as well, but still. Acer has just purchased Gateway for $710 million. Now they are 3rd in the world just behind Dell and HP.

I was shocked to learn about the acquisition of Gateway. I remember having an Acer monitor, but that was about it.

Taiwan-based Acer has acquired the once high-flying Gateway Computer for a mere $710 million, in what could be the last significant deal in the PC hardware business, reports the Wall Street Journal. Acer also acquired the parent of Packard Bell, thereby becoming the third-largest PC maker in the world, after Dell and Hewlett Packard.

The $710 million price tag is quite a comedown from the mid-1990s, when Gateway and Dell (DELL) were spoken of in the same breath and commanded mega-billion dollars in market capitalization. Gateway was one of the companies I covered back in the day, but then slowly lost interest in as the company floundered.

Over the years, a lack of focus and ill-thought forays into consumer electronics turned the company of cow spots into a cow patch. Dell was focused on squeezing efficiencies out of its supply chain and selling to the corporations, while Gateway’s management took a scattershot approach — they did everything and were never good at anything in particular.

They opened retail stores, tried to sell to businesses, and then when low-cost PCs took off, they bought eMachines. No focus! In comparison, post-Carly Fiorina, Hewlett-Packard (HPQ) overcame a poor start, developed a coherent strategy around printers and digital media, has slowly seen its market share climb and is now neck-to-neck with Dell.

Apple (AAPL), HP and Dell are the only three U.S. majors left standing after the Acer acquisition, each with its unique expertise (and thus the ability) to play in the highly commoditized PC market place. IBM (IBM) got out while the going was good and sold its PC-business to China-based Lenovo. Apple has its own cult of users, H-P (digital media) and Dell (corporate buyers.)

Gateway founder Ted Waitt left the company in 2005 after attempting a turnaround that failed. He’s currently chairman of the Waitt Family Foundation, which funds Waitt Institute for Discovery and Waitt Institute for Violence Prevention. He has also set up Avalon Capital Group, a private investment company.

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