In an effort to stay alive, Gateway will purchase competitor E-Machines. The resulting company will be the third largest PC manufacturer in the world behind HP and Dell. (or is it Dell and HP?)
I've seen this many times over the years and rarely does it work. When a company like Gateway is struggling they tend to reach for solutions. Purchasing another struggling company seems to be popular. What you usually have left is a larger, struggling company. What will this change? Dell will still have enormous market presence and HP will still be regarded as the most innovative vendor. Can costs be reduced by this type of merger? Sure, but let's face it when your selling your machines for $499.00 how much will it matter? Does E-Machines bring any innovation to the party? Yes, they sell for $399!
I believe there will always be a market for the low end. The question is can a company like Gateway survive there? Walmart is selling HP for $600.00. Dell has $499.00 workstations. Very tough to beat! How much does the spread have to be in order for a purchaser to consider an "off brand" product. And lets face it if your not Dell or HP you are "off brand". Even if you are #3.
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