Acer's Play For Gateway Shakes Up PC Market

Acer's decision last week to acquire Gateway for $710 million—and with it Gateway's first right of refusal to acquire Packard Bell—will vault the Taiwan-based company into the No. 3 spot among the world's PC vendors and give it a strong new presence in the U.S. market and a one-up in its competition with rival Lenovo, which was planning to acquire Packard Bell.

On the surface, the acquisitions are about retail space. Gateway, which has both the Gateway and eMachines brands, has a strong retail presence in the U.S., while Packard Bell, which left the U.S. market years ago after a disastrous series of product and support problems, is strong in the European retail market. Gateway also said it plans to sell off its U.S.-based professional business to an undisclosed third party. That business unit focuses primarily on education, government and business customers.

The deal is expected to have little impact on the channel, unless Acer finds a way to take advantage of Gateway's brand and education business to increase its channel presence, solution providers said.

Solution providers also said Acer has good channel relationships, but they are mixed on Gateway's channel friendliness.

Acer offers very good desktop and portable PCs, said Kevin Bruce, owner of Professional Computer Solutions, a Durango, Colo.-based partner of Acer, Dell and Lenovo. The only problem with Acer is that it does not offer an authorized services program for solution providers, Bruce said.

Ted Hunter, owner of Champion Networks, a Brunswick, Maine-based solution provider, said Gateway has a direct sales force that has traditionally not been very friendly to the channel. Acer, on the other hand, does not have much of an enterprise business. For Acer to succeed in the U.S. market, it needs to grow its business into the enterprise, and it needs to add services, Hunter said.

The main impact of the acquisition will be on Lenovo, said John Spooner, senior analyst at the Computer Business Quarterly division of Technology Business Research. "Where Lenovo needed its push is on the consumer side, which is why blocking of the Packard Bell acquisition will force Lenovo to look elsewhere, or turn back to a strategy of organic growth through the reseller channel," Spooner said.