Born in a Barn!

Gateway 2000^® is a leading global marketer of personal computers. Ted Waitt, chairman and CEO, founded Gateway 2000, Inc., in September 1985, in Sioux City, Iowa, with business partner Mike Hammond, vice president. The company moved to its present location in North Sioux City, South Dakota, in January 1990.

Waitt, a fifth generation Midwesterner, grew up in a family atmosphere that encouraged entrepreneurship. The previous four generations of Waitts were cattlemen, a breed known for their independent, risk-taking approach to business. Ted Waitt took the cattleman's spirit into the world of high technology.

Waitt and Hammond formed Gateway 2000 with one goal in mind - to offer PC buyers a logical alternative to the high markups, limited choices and inadequate support common in the retail PC market. The partners started by selling hardware peripherals and software to people who owned Texas Instruments personal computers. By placing ads in computer-related publications and selling their products directly to end users, Waitt and Hammond helped pioneer the direct-market growth in the PC industry, generating $100,000 revenue in their first four months of business.

In 1987, Waitt recognized another relatively untapped market, that of technically sophisticated customers who would buy completely configured PCs sight unseen if they were given a good price. Under Waitt's direction, Gateway 2000 designed and assembled its own fully-configured PC-compatible systems. This strategy catapulted Gateway's sales. The company reported revenues of $1.5 million in 1987, $12 million in 1988, $70.6 million in 1989, $275 million in 1990, $626 million in 1991, $1.1 billion in 1992, $1.7 billion in 1993, $2.7 billion in 1994, $3.7 billion in 1995, and $5.04 billion in 1996. Sales for the first quarter of 1997 were $1.42 billion.

Gateway 2000 became a publicly traded company in December 1993, offering stock on the Nasdaq market under the symbol GATE. In September 1993, Gateway 2000 expanded beyond its headquarters in North Sioux City and opened a customer hardware support facility in Sioux Falls, South Dakota. The company launched its first international effort through the establishment of a direct marketing and manufacturing operation in Ireland in October 1993. Continuing its U.S. expansion, Gateway opened a sales and customer support facility in Kansas City, Missouri, in November 1994. That year, Gateway expanded its worldwide presence with showrooms in France and Germany and has since added another showroom in Germany, as well as Japan and the U.K. This year, the company added new showrooms in Sweden and Australia, and additional showrooms in Germany and the U.K. In August 1995, Gateway acquired Osborne Computer of Sydney, Australia, and began selling to the Australian market. In September of 1995, the company announced plans to build its third United States manufacturing facility in Hampton, Virginia. Manufacturing operations began there in July 1996, an in December 1996, the company announced plans to add a technical support call center in Hampton as well. In December of 1995, Gateway opened a manufacturing facility in Malacca, Malaysia. This facility manufactures Gateway 2000 desktop systems and serves the growing Asia/Pacific markets. In March 1997, the company made an offer to acquire the assets of AMIGA Technologies, GmbH, including all patents, trademarks and trade names. In April 1997, Gateway 2000 announced a planned expansion of its Hampton manufacturing facility that will increase production capacity by 50 percent. Construction is scheduled to be completed by August 1997.

The company's desktop product line is exclusively Intel^® Pentium^® processor and Intel Pentium processor with MMX^TM technology-based, featuring top-quality components and high-value software packages. The company's portable products include the award-winning Gateway Solo^TM multimedia Pentium processor-based notebook line. In 1996, Gateway introduced the Destination^TM big screen PC/TV, which combines the impact of high-quality, big-screen television with the intelligence of a computer. The Destination was the first convergence product in the industry, establishing a new category that combines the best elements of a state-of-the-art multimedia computer with the visual drama of home theater systems.

In August of 1996, the company's subsidiary, Gateway 2000 Country Stores, Inc., announced a pilot program to test the expansion of the direct channel by opening two Country Stores in the U.S., one in New Haven, Connecticut and one in Charlotte, North Carolina. A third county store was opened in Tampa, Florida in April of this year. The Country Stores are modeled after existing showrooms in Europe, which have proven a very successful way for customers to learn about Gateway products on a face-to-face basis before buying direct.

Innovative Approaches

Gateway 2000 is unique in the PC industry because the company maintains a very close relationship with its customers and has developed an extremely efficient, responsive, low-cost business model unmatched by competitors. By concentrating primarily on the direct channel, the company has built a reputation for excellent values by consistently providing reliable products and outstanding customer service and support.

Because of its concentration on selling directly to end users rather than relying on dealers or distributors, Gateway has developed and maintained a strong relationship with customers. Company representatives are constantly in touch with the people who buy and use the company's products. This closeness enables Gateway to respond to customer requirements more rapidly than its competitors.

Numerous Awards

Gateway 2000 has been consistently honored with awards for products and service. In 1997, Gateway 2000 was awarded Aetna's Supplier of the Year distinction, based on the company's demonstration of excellent service and reasonable prices. In 1996, the P5-133 won Federal Computer Week's "Best Buy" award, and the P5-166XL was awarded Home PC's "Editors' Choice" award and a BYTE Readers' Choice award. In July of 1996, PC World announced Gateway's professional and Family PC desktop lines had earned their "World Class" awards. In the fall of 1996, Gateway 2000 was named the best place to buy office and home PCs by Computer Shopper readers. Also earning Computer Shopper Best Buy awards were the company's Professional and Family PC lines. The Gateway Solo portable has also been making its mark on the industry, garnering a "Computer of the Month" award from Business Solutions, and being named to PC Computing's "A-List" of portables.

The company also continues to receive high marks for its service. In 1996, Computer Shopper readers named Gateway 2000 as the provider of Best Service and Support. Also in 1996, BYTE magazine readers named Gateway 2000 as the Company With the Best Service. In 1995, PC Magazine readers awarded Gateway 2000 desktop and notebook PCs a "Readers' Choice" award for service and reliability.

Employee Participation

Ted Waitt's passion for ensuring customer satisfaction is equaled only by his determination to provide employees with a personally rewarding work experience. Waitt's philosophy encompasses the belief that if a company treats employees fairly, provides opportunities for growth and makes the environment a fun place to work, the employees will make the company grow and generate profits. Gateway employees, now numbering more than 9,700 worldwide, have a direct stake in the success of the company and have multiple opportunities for career advancement.

Employees also participate in another key aspect of the company - advertising. Gateway's phenomenally successful national ads, created and produced by an in-house department, feature Gateway employees in humorous skits that have defined the Gateway 2000 personality to customers worldwide. In the fourth quarter of 1995, the company launched a U.S. television ad campaign aimed at the consumer market. Those ads were followed campaigns in the spring and fall of 1996, and a campaign that debuted on Super Bowl Sunday 1997.

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