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The Pit BLOG

August 2007

The Gateway Blues

Hi Everyone,

I've been working hard at PC Pitstop trying to get out our new products. I love this challenge, but my work flow has suffered a major interruption. Acer is buying Gateway, and I received 10, count 'em, 10, emails, asking for my thoughts. Rather than respond to all 10 emails, it is a far more efficient use of my time to write a blog.

How does this make me feel? Two basic and extremely visceral feelings, mad and sad.

Let it be known that I am a PROUD ex-employee of Gateway. I started as the Director of Marketing in 1991, and I left in 1998 as the SVP of Gateway's Consumer Group. During those 7.5 years, I learned more lessons about life, technology, and business than any MBA could buy. Plus at the time, we were the leaders of the PC industry. Intel called us the rabbit that the other vendors chased. It might seem mundane now, but Gateway was the first company to make standard the CD-ROM, the FAX modem, the 17" monitor, the sound card, and internet service. The list goes on. Let's be clear, during that era, we were second to none.

It is this pride that makes me MAD. And not just a little bit, a lot. Psychological theory suggests it is unhealthy to hold inside this type of anger. So let me direct it at a few choice CEO's. The first on my list is Jeff Weitzen. Straight up, he is the reason that I no longer work at Gateway. In some ways, I should thank him because he got rid of me before he destroyed the company and its stock price. Ted Waitt said shortly after we went public in 1993, "Take care of our customers, employees, and suppliers, and the stock price will take care of itself." Weitzen in the short period of time managed to turn this simple philosophy on its ear.

Customers, employees and suppliers all took a back seat to Weitzen's drive to run the stock price up. Anyone standing in the way of this tidal wave shift was summarily dismissed. I am proud to say that I was one of the first in line. It should not come as a surprise to anyone that SEC investigated Weitzen for fiscal improprieties. Too bad, that they didn't come to talk to me. I know a LOT of people that have bullets for that gun.

Next up to the plate in the Gateway CEO Hall of Shame is Wayne Inouye, ex CEO of eMachines. In fairness to Wayne, he's not a bad guy, but his judgement was catastrophic. Gateway's route to market in the 90's was direct marketing . Instead of breathing life into the most profitable segment of its business, Inouye chose to focus on retail partners such as Best Buy, virtually suffocating the direct business. Under Inouye's rule, direct marketing became the ugly stepchild of Gateway. On top of that, Inouye made perhaps an even larger gaffe. When Inouye took the helm in early 2003, Gateway had created a very large and profitable television business. I personally am the proud owner of 2 X 42" Gateway plasma televisions. In order to suck up to the retail channel, Inouye chopped the entire television business, robbing Gateway of one of its largest hopes for long term survival.

And the last entry for the shortest midget is Ed Coleman who began at Gateway a little over a year ago. Let's see, you got Steve Jobs hammering Vista in TV advertising, and introducing the iPhone. Next up, you got Michael Dell, entering the Linux market, and establishing a beachhead in retail with Walmart. What's Easy Ed accomplished at Gateway? Best I can tell, his two major accomplishments are changing the company's dress code, and six sigma training. Somehow they pale in comparison.

It is obvious that each of these CEO's played a hand in Gateway's demise. It is interesting barroom talk to discuss which had the most profound impact. My money is on Weitzen. His arrogance had no limits, and it was his house of cards that the other CEO's inherited.

But now I am feeling sad. Unlike any of these CEO's, I still have constant contact with many Gateway employees. It makes me sad to see the hope that each of these CEO imposters have dashed. It makes me sad to think of my remaining friends future in light of an acquisition from a company 12 times zones away. But it makes me the most sad, because I helped build that company. My baby boy is now 2 months, and when he buys his first computer, I wanted to say "Your daddy helped put that company on the map." That really makes me sad.

Enough sadness and enough madness. Unlike Gateway, PC Pitstop has new products around the corner. Back to work, and best wishes to all of my friends and associates still at Gateway.

Join the Discussion
Joyce Jones: The Gateway Blues (Wed, 10 Oct 2007 00:59:53 GMT)
Of course, I am not a techy or former Gateway employee; I am only one of those LITTLE people who has bought and used Gateway desktops x4. I am very disappointed with the way the company has gone - down. Having had business in home with unreliable tech support is not something that the small businesses can afford. The tech support by telephone that one can obtain now is totally unreliable. Ordering parts such as power supply or motherboards cannot be counted upon to receive the right part. Makes one stop and think that maybe Gateway's original thought was that typical of business - start a business, build it up, do attrition and then sell out at a large profit. The sad part is now that they are losing all of us LITTLE people, the next step will be losing the larger accounts such as government, education and large company contracts. I really do not know much about Acer Co. but if they cannot put some of the preexisting tech support, warrantee, etc. programs back into play, they are not going to make it either. Just wanted all of you former Gateway people know that you are surely missed in the biggest way. The bright aspect of this is there are jobs out there where we, the LITTLE people will be able to reach you and get help and support when we need it, by people who really know their business on sites like PC Pitstop and CNET.
writeman47: The Gateway Blues (Wed, 19 Sep 2007 16:49:31 GMT)
When my wife's desktop went belly up, and she wanted a laptop to replace it, I foolishly bought her one from Gateway. It came with Vista installed and she (and thus, I) have had nothing but problems since then. I called Gateway to ask about getting a copy of WinXP to replace Vista (a downgrade or maybe an upgrade, depending on how you look at it) and the response I got made me pretty unhappy. First, they told me I should have bought the laptop with XP on it, instead of Vista. Why would I have done that when Vista was supposed to be the latest and greatest? Then they told me they'd send me a copy of WinXP if I sent them $200.00. I sure do miss being able to visit my local Gateway store where they actually were happy to help you with your problems. Definitely the last Gateway I'll ever own.
vairchet: The Gateway Blues (Fri, 14 Sep 2007 18:46:33 GMT)
It's too bad Gateway is circling the drain. I bought a Destination series system with the 32" CRT monitor in 1998 (still have it) 'cause the thought of sitting across the livingroom with a wireless keyboard & mouse was rather appealing. The Zenith monitor finally crapped out five years later. So, I decided it's time for an upgrade. You got it.... another Gateway system, a Destination II with all the bells & whistles at the time. Once again, the monitor takes a royal dump (I guess the life expectency for a large monitor is limited). Replaced the monitor with a Viewsonic LCD N4251W flatscreen. Boy, what an improvement! The original Gateway Destination II computer still works like a charm. Rather slow as compared with current computer systems, but I'm quite happy with it. Service at the local Gateway store was exemplary when a minor problem would crop up. One thing I discovered, the internals to the computer are proprietary. In other words, no aftermarket components would fit, such as video cards. Oh well, no biggie, I'm not a gamer anyway. I believe one big mistake was Gateway moving to California.
ravix: The Gateway Blues (Fri, 14 Sep 2007 03:14:32 GMT)
I also loved Gateway, especially when they had the Gateway Stores. I went to the store shortly after it opened about 30 minutes away and order by current pc in March of 2002. I had very little problems other than some twicking I did that didn't work as I hoped for. But the customer service was great! They helped me out in no time at all. The last time I called customer service, which was about 2 years ago for info on more RAM. I got some foreign guy that could only say yes and no in english. Everything else was not understandable. I was hoping to have them help me rebuid with newer technolgy since I can't stand the look of the current towers. I probably will have to go with buying a new DELL although I hate the look of their towers.
EcRocker: The Gateway Blues (Fri, 14 Sep 2007 01:47:50 GMT)
I used to love Gateway. As it was stated Gateway was the leader. What went wrong? I wish I had all the answers but I do know one thing that helped to kill Gateway. I didn't think it was a bad thing to have the "Gateway Country Stores". It gave people a chance to either buy an already built PC or have it custom ordered at the store still keeping the option of calling Gateway directly. However putting Gateway locations in every single Office max was bad. I am sure it was costing Gateway quite a bit of money to operate the GCS's why did they need another outlet? First off the people manning the Gateway Corners in OM were not employees of OM. That meant Gateway had to put those people on the payroll. Now you have to have "Demo" equipment for display. If i am not mistaken back in 2000 not to many areas had Cable modem or DSL services available and a T-1 line was requiered. I do believe wasted all that money and it took away from what the company was supposed to be about.
wdb143: The Gateway Blues (Thu, 13 Sep 2007 23:58:26 GMT)
I too am a proud Ex-Gateway Technician..... I started in Aug 95 and was laid off when they closed the call center in Sioux Falls on 31 Sept 03....... We had great managers and a good teams that helped allot of people fix their computers. Calls that started with the person crying about something not working or that they deleted something important....Being able to help that person and get the system working for them was a good feeling..... Many times I would stay late to help someone..... I am upset that the management would say the lay off is coming but we don't know when.... We heard that for along time. When the day came we were happy...... There was 100s of tech let go that day...... Many of us went to Buffalo Wild Wings for the day to drown our sorrows....Mission accomplished .I am sad that GW stock went down so far so fast because I lost allot of money .. The pay was good, bonuses would great, getting computers for free or thru employee purchase saved us some money. The lay off package was a big help till we found new jobs . Many of us were able to go back to college for two years . I got a Bachelor of Science degree in Criminal Justice from Colorado Technical University that the state paid for But I have not found a job using it yet .
It s fun that now I work in one of the old Gateway buildings here in Sioux Falls. It s still in electronics too but not computers Have allot of good friends from the Gateway days
Bill Blake
PkBear: The Gateway Blues (Thu, 13 Sep 2007 20:48:03 GMT)
Well, I never worked at Gateway, but my first PC did come from them - way back in 1999. This thing was rockin' - PIII - 450, 128MB RAM, 13.6GB HDD, VooDoo3 3500... and the cherry on top of this beast...a DVD-ROM drive!
The system was not without flaws - the vid card burned out the 2 day I had the system. BUT, as mentioned by other posters - Customer Service was top-notch! A short phone call, and the replacement was out to my barracks in time to beat the hurricane (Floyd) that kept us locked down for several days.
Of course, the technical specs were surpassed in short order, but this PC provided 6 years of faithful service with few hiccups and no major breakdowns save for that ill-fated video card. Only after testing the waters with a Dell PC several years ago (because Gateway Inc. had spiralled the crapper) did I get my hands dirty building my own systems.
Truly a shame that the company that gave me such a wonderful welcome to the computing world has found itself struggling to stay an also-ran...
mdevelle: The Gateway Blues (Thu, 13 Sep 2007 18:16:26 GMT)
You wrote: "This started before Weitzen There is no doubt that Gateway had its fair share of problems before the Weitzen era, but the financial performance and its position in the market place were strong. Of course, there is always room for improvement. Weitzen removed EVERY person in upper management. Good or bad, big or small, we all were either demoted, dismissed, or resigned. This more than any one thing is how Gateway lost its way, because continuity was lost."

Sorry to hear about your lousy experience with this dolt of a manager, and kudos on the kiddo. Babies have a monoply on "cute" until they are about 2 or 3 when they realize they can manipulate adults so easily.

Anyway, this Weitzen guy didn't just show up at the CEO door step. He had to have been brought in by someone - and that is the Board of Directors. They did not do "due diligence" on this guy to find out what and how he managed as a manger elsewhere. They BoD is supposed to represent thestockholders. The stockholders with the biggest holdings usually end up on the board, and you would think it would be in their interest to get the right guy. Unlike Enron and the lying bas***ds that Ken Lay put in charge of things, this guy had a transparent history that should have been discovered. So - ultimately blame the BoD for shoving this guy into the picture.
badbinary: The Gateway Blues (Thu, 13 Sep 2007 17:39:20 GMT)
did you try contacting foxconn directly?

appearantly you told gateway when you purchased the computer that you did not want them to support the product beyond the cursory period.
nlada: The Gateway Blues (Thu, 13 Sep 2007 17:09:30 GMT)
Hi, While I've never worked for Gateway or any other company,I have a few things to say. I've always owned self built computers until May of '06. I decided to by a new Gateway GT5056 with the AMD Atlon 64X 2. Big mistake! Two months ago it started giving me problems like slowing down. I did and ran all the standard test and programs but nothing helped. 3 weeks ago, it died or should I say the motherboard(Foxconn) did. That was when I found out that because Gateway used a BTX case rather than a ATX, I could not just go out and buy another mother board to replace it. Then things went from bad to worse. After calling Gateway's customer service multiple times and getting "accidently cut off, transferred with no knowledge they were doing it I found out that Gateway does not have any replacement motherboards to sell and there are no other brands that can be bought to replace it. I ended up having to buy a new ATX case and a motherboard and then moving everything else from my Gateway to it. Due to all of this, I will never buy a Gateway again and I'm telling everyone I know. I would have had no problem if customer service hadn't given me the runaround and if Gateway at least stood behind their products enough to keep replacement parts available to sell to their customers. I perfectly understand how electronics can go bad but I can't see a company deserving to stay in business in the manner that Gateway is running now. What they sold me was a machine that in no way can be repaired easily. I did a lot of searching of tech boards and found out that I was not the only one that had one of these Gateway models that were in my position. I feel so bad for those who don't know how to put a computer together. They are out all the money they paid just over a year ago and have nothing but a piece of non working junk to show for it.
Bunella: The Gateway Blues (Thu, 13 Sep 2007 16:40:45 GMT)
All my computers have been Gateway. I have 2 desktop and one laptop now and i love them.

i remember when i lived in NY and had a fried motherboard, they actually sent someone out to replace it after they sent me the new part by UPS.

Those were the days. How terrible the news was to me.

Black and white cows are crying all over South Dakota.
dinty: The Gateway Blues (Thu, 13 Sep 2007 16:30:24 GMT)
QUOTE(cmunson @ 11:54am Wed Aug 29 2007) [snapback]1416635[/snapback]

It's great to see so many familiar names out there. I think our accomplishments stand on thier own. I think that Rob is wrong in one respect. Sure we had the first standard CDRom, Fax Modems, and the fabled Field Mouse to be sure. But beyond the musings of Destination and Handbook owners, we need to remember what we really did.

In 1995 when I started in Kansas City, I did not have an email address, a web site, or even consumer financing to help me sell computers. Customers would que up for an average of five minutes to talk to a salesperson, who would help them choose a computer out of a catalog. The computer would cost about four grand on average, which was placed on their major credit card, and they would wait four to six weeks for delivery.

Our tech support line rang busy four months out of the year, but people still raved about our service.

We had the best boss, and the best people in the business. My heart is still broken from the Jeff Weitzen era that meant the end not of the company, but killed the company's heart.
badbinary: The Gateway Blues (Thu, 13 Sep 2007 13:34:03 GMT)
i'm sorry, but being born and raised in south dakota i have to ask this one question: what the heck is so nice about eastern south dakota? it's all flat with corn and wheat fields as far as the eye can see.
IntelGuy: The Gateway Blues (Thu, 13 Sep 2007 07:47:38 GMT)
This came in the side door unannounced, so I'm posting it here:

I miss Gateway
The best years of my career was in SD

I really hope this gets on the blog. I share Robs fellings exactly the same way. I'm Mad and Sad. I only worked at Gatway for two years and a few months. They were the best two years of my life! I would move back to sioux land at the drop of a hat.
I was fired the day they hung cabinets in my newly remodeled home in Vermillion,Oh how I miss that part of the country and feel in love with every "Gatewayer" that had a lower LBN. I always held them in high regard for what they had accomplished. Now I'll never get invited to the lake with inner circle however I live vicariously through the stories and fun that appears to be had by one and all in that so many fun gatherings were always happeniog in Sioux d tons of fun restaurants and great beer holes.
I was one of those bluesuited PepsiCo MBA's who realized what those who didnt have them had a lot more. They had eachother and each and every one had way more than me. Where Iwas accepted I realished the opportunity and where I wasn't I was sad.
I love and miss spaghetti night at wimps on Thursdays
I love and miss Verillion and South Dakota
I miss Cary's
I miss Minervas Salad
I The place wth the loose meat sanwiches and schooners of beer
I miss Sioux Falls
I miss Lamars and a gret steak

Anybody wanta meet me for a beer up thier let me know

Ed McPherson
chengrob: The Gateway Blues (Tue, 04 Sep 2007 14:40:44 GMT)
Great interview from Gateway's new CEO.
Bruce: The Gateway Blues (Tue, 04 Sep 2007 12:00:27 GMT)
It's so sad to see these type of people cut and slash and destroy good companies with no regard for the future and a total disregard for the people who make it all work.

This isn't uncommon and unfortunately seems to be more the status quo in the past decade.

chengrob: The Gateway Blues (Mon, 03 Sep 2007 16:27:53 GMT)
Hi Everyone,

I want to thank everyone for all the emails and the responses here at the PitBlog. And of course, thanks for the well wishes of my newborn son. I really love him a lot, but he could improve on his ability to tell time, and his ability to articulate his most basic desires.

I am really astounded at the response to my piece. I had been holding my feelings inside for so long, and it just came out. Imagine if I had written a similar piece about Dell. There would be one of two outcomes. 1- No one would read it 2- People would debate the validity of my comments. Neither of these happened! The response to the poll has been enormous. If you think about it, these are not your average customer voting, these are people that know and care about Gateway. Secondly, there is NO ONE defending the status quo. Hmmm. An undefendable status quo.

Last March, I wrote a song about Gateway and many of my friends still working there. I tried to capture the frustration, and the need for change. I called the song Lay it down. It also has a cool guitar lead. Check it out.

I had numerous interesting comments that I'll try and address a few here.

This started before Weitzen There is no doubt that Gateway had its fair share of problems before the Weitzen era, but the financial performance and its position in the market place were strong. Of course, there is always room for improvement. Weitzen removed EVERY person in upper management. Good or bad, big or small, we all were either demoted, dismissed, or resigned. This more than any one thing is how Gateway lost its way, because continuity was lost.

Why didn't you include Rick Snyder and Ted Waitt? It would have been quite easy to include these two, but to be honest, it would have been a waste of space. No one would have voted for these two guys. When you talk about the soul of the company, you are probably talking about these two. Plus I thought it might offend them to be considered in the same breath as the other three wannabe's.

The poll has been fascinating. It is clear that Weitzen is the runaway winner for worst CEO in Gateway's history. As a prize, PC Pitstop will send him a lifetime supply of underwear. I don't take this responsibility lightly, because I am guessing that Weitzen goes through at least two pair a day, because he is so full of sh*t.

Helzerman: The Gateway Blues (Sat, 01 Sep 2007 18:43:06 GMT)
Rob... first of all, congratulations on your new baby! Re: Gateway, I think all former employees (including me) are sad to see it go. Like the person who replied earlier, I too think it would be interesting to see North Sioux City and the cow-spotted buildings now that Gateway is no longer there. Who the heck filled all those houses in Dakota Dunes? I think, however, that you can not say the demise started with Jeff. Things were going down before then. I remember we were always trailing Dell but at a steady pace. People would say that Michael was a :filtered: to work for, but he was all business. Ted kept a lot of his friends around. I honestly think you contributed a lot to Gateway's success, but, we can not say that about every exec who was there in the mid 90's while Ted was still CEO. Sadly, this is not a short story of three bad CEOs, but one that had its roots much deeper and further back.
Lucky Dog: The Gateway Blues (Sat, 01 Sep 2007 03:43:26 GMT)
Reading the comments makes me sad and longing for the Gateway of old. I to am an X, who actually moved to SUX to join GW in the late 90's just before the Weitzen era. I remember doing my final interview with Ted before I was hired. After he gave over control to Weitzen you could feel the life being sucked out of the employees. Bureaucracy overtook quickness.

The layoffs started, people were treated like dirt. People who were so loyal to the company escorted out of the building by security guards. People who if they had been told that they were being layed off and their final day would be in 2 weeks would have gone back to their desk and bleed cow spots for 2 weeks. It made me sick to my stomach.

Then came the day when I was told I was going to be moved to Irvine, and I couldn't do it. I remember the day that I called my boss and told him I was moving, and he assumed it was to Irvine. When I said no I"m going to Austin. There was just silence (no I didn't join Dell). I had already moved all my effects out and was not surprised when 30 minutes later HR was at my desk and I was processed out of the company. Albeit not with the security guard.

Then to top it all off I got a call from a head hunter a couple of months later asking me if I would be interested in working for a computer company and she read off a job description. She said she could not tell me who the company was. I asked her if she had looked at my resume. A second later, she said "Oh My". Then she asked if I would be interested in going back. I rolled on the floor.

I am so thankful that I left when the stock was in the 90's and I had options that were worth something. One of my former employees asked my advice once. He said he had a job offer elsewhere. I said take it. He said but I have all these stock options. I said no you have a lot of toilet paper.

It would be so sad to go back to SUX and see the great cow spotted buildings with empty parking lots. GW was the people who worked there. I have learned to reflect on the good times and be thankful that I had the experience of a life time.
badbinary: The Gateway Blues (Sat, 01 Sep 2007 03:14:52 GMT)
those issues still occured, it just wasn't as widely known because they weren't as widely used.
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