There's a new No. 3 in the U.S. personal computer market. Taiwan's Acer is buying Gateway Inc. for $710 million, edging past China's Lenovo Group which bought IBM's PC business two years ago.
Gateway bought eMachines Inc. in 2004, creating what was then the third-largest PC maker in the American market, behind Dell and Hewlett-Packard.
For Gateway, the sale is a bitter acknowledgement of defeat in its long-running struggle to catch up with Dell and HP. Founded in 1985, Gateway and Dell pioneered the concept of direct-to-consumer PC sales but Dell opened up a lead that Gateway was never able to close.
Size is everything in the personal computer business. Larger manufacturers are able to buy components for less, enabling them to undercut their smaller rivals.
Acer president Gianfranco Lanci said that, at least initially, he would fold Gateway's supply chain in Acer's, taking advantage of expanded buying power, but would keep Gateway operating as a separate company.
Acer has not sold computers under its own name in the U.S. since the mid-1990s, though it has manufactured machines sold under other brand names in the U.S. market.