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								April 27, 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.
	Form 10-K for the year ended December 31, 2004
	File no. 000-22784

Dear Mr. Sherwood:

      We have limited our review of the Form 10-K to the following
issues. Where indicated, we think you should revise your document
in
response to these comments.  If you disagree, we will consider
your
explanation as to why our comment is inapplicable or a revision is
unnecessary.  Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
supplemental information so we may better understand your
disclosure.
After reviewing this information, we may or may not raise
additional
comments.

      Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We
look forward to working with you in these respects.  We welcome
any
questions you may have about our comments or on any other aspect
of
our review.  Feel free to call us at the telephone numbers listed
at
the end of this letter.

Management`s Discussion and Analysis

Results of Operations, Page 29

1. Your current disclosure indicates that sales were impacted by
the
contribution of the eMachines acquisition, the closing of retail
stores and the transition to a retail-distribution method.  Tell
us
what consideration was given to quantifying the impact of each of
the
factors that contributed to the material changes in each income
statement line item.  Please provide the staff analysis of the
amounts
in the periods ended December 31, 2004. In this regard see the
Commissions "Guidance Regarding Management`s Discussion and
Analysis
of Financial Condition and Results of Operations" Release No. 33-
8350.

2. You disclose on page 25 that you have realigned the
organization to
focus on "front-line" selling.   Define "front-line" selling and
further explain how this realignment impacted operations.

3.	We note that your consumer services support and professional
services support are included in the major product group revenues
for
Convergence/non-PC Products and Services for 2004.  Of the
$822,960,000 of Convergence/non-PC Products and Services revenue
in
2004, tell us if any of the revenue relates to services for 2004.
To
the extent service revenue is material, tell us how you considered
Rule 5-03.1 and 2 of Regulation S-X with regards to your income
statement presentation.

4. You disclose on page 30 that margins were negatively impacted
by
the shift from Gateway-owned retail stores to third-party retail
stores.  It is unclear from your disclosure why this is the case.
Tell us the nature and cost structure of these two distribution
channels and why the third-party retail sales would have a
negative
impact on margins more so than Company-owned retail stores.
Describe
any arrangements and changes to those arrangements involving
price-
protection, concessions, returns or rebates associated with third-
party retailers both prior to and after the transition.  Tell us
how
you considered disclosing this information in your Form 10-K.

5. Your disclosure on page 31 lists several factors that
contributed
to the decrease in margins (i.e. higher rebates, sales of reserved
inventory, stores closings and litigation settlements).  Tell us
what
consideration was given to quantifying these items.  Tell us how
you
considered the following in your disclosures:
* the amount of inventory reserves recorded for excess inventory
and
to the extent the inventory was subsequently sold the dollar
amount of
sales and related impact to margins;
* the dollar amount of rebates recorded and the reasons the
rebates
were higher in 2004;
* the nature of the settlement for the patent infringement and
specifically how this impacted margins.  Also tell us why your
classification of this settlement is appropriate.

6. Included in your disclosure on page 31 is a discussion of the
impact items such as restructuring, transformation and integration
charges would have had on SG&A had they been excluded.  Tell us
how
you considered Question 8 of the Frequently Asked Questions
Regarding
the Use of Non-GAAP Financial Measures issued June 13, 2003.

7. You disclose throughout the document that you have consolidated
your supply base and ceased manufacturing operations.  Currently
your
disclosure in MD&A does not address how this transition impacted
your
cost structure or your results of operations, liquidity or is
expected
to impact future operations and liquidity.  Tell us how you
considered
disclosing the impact of consolidation and outsourcing of
manufacturing on your operations and liquidity and any material
trends
relating to cost savings that you anticipate resulting from this
transition.

8. Tell us what consideration you gave to disclosing the nature of
the
$100 million gain recognized related to the redemption of
preferred
stock in fiscal 2004.  For material unusual or non-recurring items
and
their effect on earnings see the Commissions "Guidance Regarding
Management`s Discussion and Analysis of Financial Condition and
Results of Operations" Release No. 33-8350.  Also tell us the
nature
of the credits given to AOL, how they were accounted for and the
impact the credits had on the gain recognized.

Liquidity, Page 36

9. We note that your days of sales in accounts receivable
increased
from 22 to 30 from December 31, 2003 to December 31, 2004 and your
days of inventory on hand increased from 14 to 19 for the same
periods.  Tell us why these ratios have increased year over year
and
how the longer period to convert accounts receivables to cash or
move
inventory has impacted your liquidity.  Tell us what impact these
measures had on meeting your long-term and short-term obligations
(i.e. service debt and trade payables).  Tell us how your DSO
compares
to your standard payment terms.

Note 1. Nature of operations and summary of significant accounting
policies

(c) Cash and cash equivalents and Marketable Securities, page 48

10. Please tell us if you hold auction rate securities and if so
please explain your classification and accounting for these
securities
in each of the periods ended December 31, 2004.

(f) Property, Plant and Equipment, Page 49

11. We note that you changed the estimated useful lives of certain
store assets.  Tell us how you considered the disclosure
requirements
of paragraph 33 of APBO No. 20.

(I) Deferred Stock Based Compensation, Page 51

12. Please tell us how you determined the value of the 5.3 million
shares of restricted stock valued at approximately $27 million
issued
to certain executives in connection with its acquisition of
eMachines.

(m) Revenue Recognition, Page 51

13. You disclose that beginning in 2004 majority of your support
services are outsourced to third-parties.  Your revenue
recognition
policy only addresses installation services and extended warranty
services provided by third-parties.  Tell us for each service and
support offering provided by third-parties how you are accounting
for
each revenue and expense activity and reference the related
accounting
guidance.  Also tell us how you considered EITF 99-19 or other
applicable guidance with regards to your income statement
presentation
of the revenues and expenses associated with these arrangements.

14. You disclose on page 7 that 26% of your direct sales were
financed
by third-parties.  Tell us:

* The nature and terms of these arrangements specifically defining
"non-recourse" as you have disclosed on page 7;
* We note on page 59 that Gateway has an arrangement whereby it
shares
in the loss experience of a third-party financing partner on
certain
purchases of Gateway products and services. You disclose that
financing originations under this arrangement ended in the second
quarter of 2001 with a maximum exposure under this loss sharing
arrangement to be approximately $1.9 million at December 31, 2004.
Explain why in recording the maximum exposure you also disclose on
page 59 that estimated losses could prove to be greater than
estimated
even though you have recorded the maximum exposure;
* How you recognize revenue related to these transactions and cite
the
authoritative guidance that supports your accounting.

15. With regards to the third party financing arrangements,
further
tell us how you consider these fees fixed and determinable.  Tell
us
what point in time you recognize revenue and why that recognition
of
revenue is appropriate.  Your response should address the
following:
* Whether or not the arrangements require you to indemnify the
financing party;
* Whether or not you are obligated to take action (i.e. terminate
agreement)  which would result in more than insignificant direct
incremental costs in the event the customer defaults on financing;
* Whether you are required to guarantee indebtedness and certify
or
attest to the financing party that the customer meets certain
criteria; or
* Provide concessions to financing parties or to customers to
induce
payment.

16. We note that with the purchase of eMachines, you will be
expanding
sales to international markets.  Your disclosure on page 18
indicates
that the risks of doing business in these markets are longer
payment
cycles and collectibility problems with accounts receivable.  Tell
us
your payment terms for your international customers and how they
differ from your domestic customers.  To the extent payment terms
for
international customers differ from your standard payment terms,
tell
us how you considered these fees fixed and determinable and how
these
terms impacted revenue recognition.

17. Notwithstanding the above, tell us why your accounts
receivable
balance increased over 60% in 2004 and whether or not you have
experienced any collectiblity problems to date. Tell us whether
there
or any material collectibility or billing problems with any major
customers or classes of customers.  Tell us of significant changes
in
credit terms, collection efforts, credit utilization and/or
delinquency policies. Tell us how much of this balance relates to
the
acquisition of eMachines and international customers and how much
of
this balance has been collected to date.

18. We note that you grant returns and provide rebates to
customers.
We also note you use historical data to estimate the future
product
returns and rebate redemptions for revenue recognition purposes.
Please provide us with the following information:
* Tell us how the change in your distribution model to transition
sales to retail stores, such as CompUSA, Best Buy and Circuit
City,
has impacted your return policy, rebate policy or other pricing or
financing concessions;
* Tell us how in view of the eMachines acquisition you have
complied
with the requirement to make reliable estimates of future returns
absent similar experience with value-based PC product.  See
paragraph
8.c of SFAS No. 48;
* Describe the rebate programs or other concession arrangements
you
offer in direct sales and explain the related accounting;
* Explain how this transition to third party retail stores has
impacted your ability to estimate returns and rebate redemptions
when
you don`t have historical information relevant to changed selling
circumstances.  Please explain how you comply with paragraph 8 of
SFAS
No. 48;
* Quantify for us the amount recorded against revenue for rebates
and
returns for each year presented; and
* Provide an analysis of how your estimated returns and rebates
have
compared to actual returns and rebate redemptions.  Please explain
any
significant differences.

19. We note in 2004 that one retailer, Best Buy, accounted for a
significant amount of accounts receivables and revenue at December
31,
2004.  Tell us the nature of your agreements with retailers,
including
the payment terms, rebates, sales incentives and price protections
granted, minimum purchase guarantees, or other price or payment
term
concessions.  Further tell us the nature of any cooperative
advertising or marketing arrangements that you have entered into
with
these retailers.  Tell us how you are accounting for these
arrangements and cite the authoritative guidance that supports
your
accounting.

20. For your sales of extended warranty plans please explain to us
how
you account for refund provisions, cancellation or termination
clauses.  Tell us how your accounting complies with SAB Topic
13.A.4.
Please tell us the amount of revenues associated with the plans
for
each of the periods ended December 31, 2004.

Note 2. Selected Balance Sheet Information., page 55

21. Tell us why you have included restricted cash in the amount of
$55
million in cash and cash equivalents. Restricted cash should be
separately disclosed from cash and cash equivalents on the face of
the
balance sheet and should not be included in the cash total in the
Statement of Cash Flows.  See ARB-43, Chapter 3A, paragraph 6.

22. Please explain to the staff why retail inventory went from $50
million at 12/31/2003 to $0 at 12/31/2004.

23. In view of the material amount of capitalized internal use
software tell us what consideration you gave to disclosure of the
related accounting policy.  See paragraph 12 of APBO No. 22.

Note 5. Commitments, Contingencies and Concentrations, page 59

24. With respect to your contingencies please tell us why you have
not
provided all the disclosures required by paragraphs 9-10 of SFAS
No.
5.  If there is a reasonable possibility that a loss exceeding
amounts
already recognized may have been incurred and the amount of that
additional loss would be material a decision to buy or sell the
Company`s securities the Company must either disclose the
estimated
additional loss, or state that such an estimate cannot be made.
Please explain your existing disclosure in this regard.

Note 10. Acquisition, page 67

25. Tell us what consideration was given to disclosing the
information
required in paragraphs 44 and 45 of SFAS 142 with regards to your
intangible assets and goodwill balances.

Item 9A. Controls and Procedures, pages 80-82
Evaluation of Disclosure Controls and Procedures, pages 80-81

26. Your disclosure indicates that "[y]our CEO and CFO concluded
that
as of the Evaluation Date [y]our disclosure controls and
procedures
were adequate...." Your disclosure must indicate the conclusions
of
your principal executive and principal financial officers in terms
of
effectiveness of your disclosure controls and procedures as
defined in
Rule 13a-15(e) as of the end of the period covered by the report.
Please advise or revise.

27.	We are unable to locate disclosure responsive to Item 308(c)
of
Regulation S-K. Please advise or revise.

28.	In the paragraph captioned "Inherent Limitations on
Effectiveness
of Controls", disclose what steps you have taken to ensure a
"reasonable" level of assurance as to the effectiveness of your
controls.

General

      As appropriate, please amend your registration statement
and/or
periodic reports in response to these comments.  You may wish to
provide us with marked copies of the amendment to expedite our
review.
Please furnish a cover letter with your amendment that keys your
responses to our comments and provides any requested supplemental
information.  Detailed cover letters greatly facilitate our
review.
Please understand that we may have additional comments after
reviewing
your amendment and responses to our comments.

      We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision.  Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for