The Acer Aquisition of Gateway to go Ahead

With both of the boards approving it, and now with no opposition from US regulators, the Acer acquisition of Gateway will go ahead.  In my opinion this is a huge deal for the corporate PC market.  Acer has some significant competitive advantages.  It’s Taiwan base puts its very close to the major component manufacturers, in fact it is itself a huge producer of components to the other PC vendors through both its OEM business and it’s Benq brand.

While it has been a steadily growing influence in the Asia-Pacific market, and has been gaining a foothold in Europe, the US market has not been a fantastic success to date.  Recently Gateway has had opposite fortunes.  While it has not necessarily been having huge growth in the US it has at least been holding ground.  However in non-domestic markets it has been doing very poorly, to the extent of pulling out of almost all foreign markets to concentrate on the US.  The Gateway brand still has strength in the US, it’s downturn has more to do with a flawed retail store strategy than any compromise on quality or technology.

With the Gateway brand in the US, once the only company that was thought to be able to rival Dell, coupled with the scale and Asian power of Acer, this could be a significant coupling if they manage to handle it properly.  There is still a potential cultural hurdle to overcome, and the regulatory regime in the US is definitely tougher than that in Taiwan.  This road has been followed before though, when Chinese Lenovo bought out the PC division of IBM.  They also need to make sure they don’t compromise their OEM business, but that has not seemed to trouble them to date.

One disadvantage they have over their rivals (HP, IBM/Lenovo, and Dell) is that they lack the Enterprise power and reputation.  They do have a server range which is netting them some sales, and this is also a path trodden before, this time by Dell.  They also started in PC’s then slowly grew their server division.  And also like Dell, Acer has a strategic relationship to address the enterprise storage market.  I would watch this company, it might just turn the PC industry back into a 4 horse race.

Tags: Gateway, Acer, merger