Gateway pulls out of UK and Ireland

Heaven's Gateway

Gateway, the US PC maker, is shutting down UK and Irish operations, with the loss of 1,200 jobs.

The company has confirmed its intention to cease manufacturing in Ireland and also to close down its European headquarters in Dublin. It is to repay in full IR£20m in grants made by the Irish government.

The company has seen sales collapse in Europe this year - down 46 per cent, according to the Irish Times.

This is a disastrous loss of market share, considering that UK PC shipments fell only 8 per cent in the first half of the year and that European sales to consumers (Gateway's key market) have fallen 15 per cent.

Gateway's retrenchment to its US home territory is designed to restore the company to profitability. The company lost $20.8m in Q2.

As a force in the PC industry, Gateway is in serious long-term decline. It intends to re-invent itself -again. We are sceptical of its chances.

Mike Maloney, the head of Gateway Ireland, told the Irish Times that the "company will not survive by just selling personal computers. It is restructuring itself to develop and sell more services and solutions".

But wasn't that the discredited strategy of Jeffrey Weitzen, the Gateway boss who was fired by founder Ted Waitt after, landing the company in a mess in the first place?

To sell services on the back of making PCs, you need first of all to be able to make and sell PCs, preferably at a profit. To make lots of money selling services, you need to sell lots of PCs to corporates - rather than consumers or small businesses. ®

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