SecProbe.io

<DOCUMENT>
<TYPE>LETTER
<SEQUENCE>1
<FILENAME>filename1.txt
<TEXT>

								June 9, 2005

Mail Stop 4-6

Roderick M. Sherwood III
Senior Vice President and Chief Financial Officer
Gateway, Inc.
7565 Irvine Center Drive
Irvine, CA 92618-2930

	Re:	Gateway, Inc.
		Amendment no. 1 to Form S-3 filed May 20, 2005
		Registration no. 333-123579
		Form 10-K filed March 4, 2005 and
		Form 10-Q filed May 10, 2005
		File no. 0-22784

Dear Mr. Sherwood:

	We have reviewed your amendment and your responses and have
the
following comments. Please respond to our Exchange Act report
comments within 10 business days of the date of this letter.

Form S-3
Incorporation by Reference, page 54

1. Please amend this Form S-3 to incorporate the two Forms 8-K
filed
on May 23, 3005 and on June 6, 2005.

Prior comment 5 - Legality Opinion
2. We note your response, however, we continue to believe that you
need to revise your legality opinion to provide a good faith
estimate
of the number of common shares issuable upon conversion of the
Senior
Convertible Notes (i.e., up to 34,762,457).

Form 10-K for December 31, 2004
Prior Comment 3 - Results of Operations, Page 29

3. We note your response regarding the $313 million of service
revenue recognized during 2004.  Please consider evaluating the
amount of service revenue earned each reporting

period.  To the extent this revenue increases to 10% of total
revenues, service revenue may no longer be combined with sales of
tangible products but presented separately in accordance with Rule
5-
03.1 and 2 of Regulation S-X.

Prior Comment 5 - Results of Operations, Page 29

4. We note your response regarding the impact of the $53 million
inventory charge recorded in 2004.  Please explain why you do not
believe that the charge and its impact on gross margin in the
second
and third quarters do not warrant MD&A discussion. Please address
the
disclosures required by Item 303(a)(3)(i) of Regulation S-K in
your
response.

5. We note your responses to prior comment 5 regarding rebates and
prior comment 18 regarding your historical rebate experience.
Because the rebates recorded in 2004 increased significantly from
prior year and were material to gross margins, tell us why you
have
not provided quantification of their impact in MD&A.  Please
address
the disclosures required by Item 303(a)(3)(i) of Regulation S-K in
your response.

6. Additionally, we note the estimates involved in recording
rebates
and the historical experience from which you base your estimates.
Please explain to us how this information as well as historical
return rates and the impact the eMachine acquisition had on these
rates was considered in your critical accounting policy and
estimates
disclosures.

Prior Comment 6 - Results of Operations, Page 29

7. We note your introductory paragraph provided in MD&A regarding
your non-GAAP measure.  Please note that Question 8 of the
Frequently
Asked Questions Regarding the Use of Non-GAAP Financial Measures
issued June 13, 2003 discusses the necessity to disclose whether
or
not the charges are recurring or non-recurring in nature and
whether
or not they relate to material known trends, events or
uncertainties
that should be disclosed in MD&A.  Consider disclosing this
information in future filings.

Prior Comment 8 - Results of Operations, Page 29

8. We note your response regarding the $100 million gain, the
details
behind the transaction and the current disclosure in your Form 10-
K.
Please consider disclosure of the value of the 2.7 million shares
repurchased, the nature of the credits and how you accounted for
them
as you have indicated to us in your response.

Prior Comment 9 - Liquidity, Page 36

9. We note your response regarding the increase in your DSO and
days
inventory on hand presented in your liquidity section for the
periods
December 31, 2003 and 2004 and your revised disclosure in your
Form
10-Q for the quarter ended March 31, 2005.  Revise your liquidity
section to explain the factors that led to the increase in DSO and
days inventory on hand, specifically addressing the impact the
transition to third party retailers had on these ratios.  Known
trends, events or uncertainties that are likely to affect the
quality
and potential variability of your future earnings and cash flows
should be discussed. See Item 303 (a)(3)(ii) of Regulation S-K for
disclosure requirements and guidance as well as the Commission`s
MD&A
Interpretive Release 33-8350.

10. Please disclose the nature of the multiple element
arrangements
you offer. Specifically address each of the elements included in
the
arrangement and the extent to which you have established VSOE for
each of the elements in your arrangements. We note in comment
responses 15 and 16, included in your letter dated March 7, 2003,
that you intended to disclose this information in future filings.

Prior Comment 14- (m) Revenue Recognition, Page 51

11. We note your response regarding the nature of your consumer
financing lending partners.  Consider revising future disclosures
to
further define "non-recourse" and to discuss and quantify, to the
extent material, the fees paid to and received from these lending
partners.

12. We note your response regarding the $1.9 million exposure to
your
financing partner.  Tell us why you believe reserving $250,000 of
the
maximum $1.9 million exposure is sufficient.  Considering these
items
were originated in or prior to 2001 and are still outstanding, it
is
not clear that the $1.9 million balance should be considered
collectible.  It appears that the amount should be reserved in its
entirety in your financial statements.

Prior Comment 18- (m) Revenue Recognition, Page 51

13. In view of the 2004-2003 changes in returns, tell us why you
have
not provided disclosure of the related impact on results of
operations and liquidity in MD&A.  To the extent material, you may
consider disclosing similar information for cooperative
advertising
discounts granted for each period.  Please address your compliance
with the disclosure requirements of Item 303 of Regulation S-K in
your response as well as the Commission`s MD&A Interpretive
Release
33-8350.

Prior Comment 19- (m) Revenue Recognition, Page 51
Prior Comment 21 - Note 2. Selected Balance Sheet Information.,
page
55

14. Tell us why you did not segregate restricted cash on the
balance
sheet in your Form 10-Q for the quarter ended March 31, 2005.  You
advised us that this would be done in your response to prior
comment
21.

Prior Comment 27 - Controls and Procedures
15. We note that your recent Form 10-Q sets forth the conclusions
of
your principal executive and principal financial officers in terms
of
"effectiveness" of your disclosure controls and procedures.  As
previously requested, please advise whether for purposes of your
Form
10-K disclosure your controls and procedures were "effective" for
the
fiscal year ended 2004 rather than "adequate" as suggested by the
third paragraph of this section of your Form 10-K.

Prior Comment 28 - Controls and Procedures

16. We note your response that you did not include disclosure
responsive to Item 308(c) of Regulation S-K in your Form 10-K,
since
there was no change that materially affected, or is reasonably
likely
to affect, the Company`s internal control over financial reporting
for that period. We also note that you will provide appropriate
disclosure in future Exchange Act filings. With respect to your
first
issue, please note that Rule 12b-13 states, in relevant part, that
"[u]nless expressly provided otherwise, if any item is
inapplicable
or the answer thereto is in the negative, an appropriate statement
to
that effect shall be made."

Form 10-Q for the Quarter Ended March 31, 2005
Note 10. Subsequent Event, page 21

17. We note that you have entered into a Marketing, Development
and
Settlement Agreement with Microsoft.  Tell us the following:
* the nature of the settlement agreement and antitrust claims
related
to Microsoft and how much of the $150 million relates to the
settlement;
* the nature of the marketing and development activities that you
will perform for Microsoft and whether or not this agreement
contains
any purchase commitments, guarantees of performance or certain
guaranteed levels of marketing and advertising that must be
performed; and

* how you plan to account for the revenue received and expenses
incurred pertaining to this arrangement.  Please provide
appropriate
disclosure.

Controls and Procedures, page 44

18. We note that you state that there were "no significant
changes"
to Gateway`s internal controls during the period covered by the
Form
10-Q.  Item 308(c) of Regulation S-K requires that you disclose
any
changes that have materially affected or are reasonably likely to
materially affect your internal control over financial reporting.
Please tell us whether there were no changes that would have a
material affect or were likely to have a material affect upon your
internal control over financial reporting or that there were such
changes.

Closing

	Please direct any questions regarding accounting matters to
Melissa Rocha on (202) 551-3854 or to Craig Wilson, the Senior
Assistant Chief Accountant on (202) 551-3226. Please contact Hugh
Fuller at (202) 551-3853 or me at (202) 551-3730 with any other
questions.

      					Sincerely,

      					Barbara C. Jacobs
      					Assistant Director

CC:	Bruce K. Dallas
	Davis Polk & Wardwell
	1600 El Camino Real
	Menlo Park, CA 94025
	FAX no. (650) 752-2111

</TEXT>
</DOCUMENT>