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Gateway-eMachines Merger: Beware the Retail Juggernaut?

Carly Fiorina got it right: For some time, the HP CEO has been saying the marketing will continue to consolidate, and today’s news that Gateway plans to buy eMachines proves the wisdom of her words. Interestingly, this merger was prompted more by Gateway’s desire to expand its retail presence than any move to push online […]

Written By
thumbnail Rob Enderle
Rob Enderle
Jan 30, 2004
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Carly Fiorina got it right: For some time, the HP CEO has been saying the marketing will continue to consolidate, and today’s news that Gateway plans to buy eMachines proves the wisdom of her words. Interestingly, this merger was prompted more by Gateway’s desire to expand its retail presence than any move to push online sales. And if HP’s and Gateway’s collective acquisitions lock down U.S. retail, both Dell and IBM may be caught flat-footed.

Gateway has simply been unable to bring its costs in line with Dell’s. By contrast, eMachines is more efficient then Dell, and it is eMachines CEO Wayne Inouye who has been tapped to run the combined entity. There will undoubtedly be some cuts, but with Inouye at the helm, they will likely be better-balanced between the two corporate parents.

One of the quiet beneficiaries in this merger is AMD, which lost Gateway some time ago when the PC maker went Intel-only. eMachines is one of AMD’s biggest clients, and it has made a good business selling low-cost products based on AMD technology. As the combined company focuses on cost and increased competition in retail, AMD again becomes a strategic partner for Gateway; the merger could increase AMD’s sales and expand Gateway’s tool set.

To read the full story, click here.

Rob Enderle is the principal analyst for the Enderle Group, a company specializing in emerging personal technology.

thumbnail Rob Enderle

Rob Enderle has been a columnist for the TechnologyAdvice B2B sites since 2003. His areas of interest include AI, autonomous driving, drones, personal technology, emerging technology, regulation, litigation, M&E, and technology in politics. He has an AS, BS, and MBA in merchandising, human resources, marketing, and computer science. Enderle is currently president and principal analyst of the Enderle Group, a consultancy that serves the technology industry. He formerly worked at IBM and served as a senior research fellow at Giga Information Group and Forrester.

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