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Comment and Response Letter

 FOIA Confidential Treatment Request

 Pursuant to Rule 83 by Gateway, Inc.

 June 17, 2005

 VIA
EDGAR TRANSMISSION (CORRESP.)

 Securities and Exchange Commission

 Division of Corporation Finance

 100 F Street, N.E.

 Washington, D.C. 20549

 Attention: Barbara C. Jacobs

 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 Ms. Jacobs:

 Reference is made to the comments of the Staff of the Securities and
Exchange Commission (the “SEC” or the “Staff”) with respect to the above referenced registration statement on Form S-3 (the “Form S-3”) of Gateway, Inc. (the “Company”), the annual report on Form 10-K for the
year ended December 31, 2004 (the “Form 10-K”) and the quarterly report on Form 10-Q for the three months ended March 31, 2005 (the “Form 10-Q”) of the Company in the letter dated June 9, 2005 (the “Comment Letter”),
addressed to Roderick M. Sherwood, III, Senior Vice President and Chief Financial Officer of the Company. The Company greatly appreciates the opportunity to discuss a number of the comments with Craig Wilson on June 13, 2005 (the “Conference
Call”).

 On behalf of the Company, I am writing to respond
to the comments and to indicate the changes that have been made in Amendment No. 2 to the Form S-3 (the “Amendment”) that is being filed today by the Company with the SEC. The numbered paragraphs below correspond to the headings and
numbers set forth in the Comment Letter, the text of which is copied below in italics for your reference. All page numbers in this letter refer to the page numbers contained in the Amendment, the Form 10-K or Form 10-Q, as applicable. For reasons of
business confidentiality, in a separate letter dated the date hereof, the Company requests that the information (i) related to the increases in sales returns as a percentage of revenue in the first sentence of the response to question 13 hereof
(“· Please address your compliance with … ?”) on page 2005.06.17.6 hereof, (ii) in the fourth and fifth paragraphs to the response
to question 17 (“· Tell us… the nature of the settlement agreement … ?) on page 2005.06.17.8 hereof, (iii) in the ninth paragraph to
the response to question 17 (“· Tell us… the nature of the marketing and

 2005.06.17.1

 FOIA Confidential Treatment Request

 Pursuant to Rule 83 by Gateway, Inc.

 development activities … ?) and (iv) in the eleventh and twelfth paragraphs to the response to question 17 (“· Tell us… how you plan to account for the revenue … ?”) not be disclosed in response to any request made under the Freedom of Information Act, 5 U.S.C.A. §552 or otherwise. Accordingly, pursuant to Rule 83 (17 C.F.R.
200.83) of the Rules of Practice of the Commission and in compliance with the procedures outlined in the Staff’s Current Issues and Rulemaking Projects, Quarterly Update, Division of Corporation Finance (June 30, 2001), a complete copy of this
letter will be provided only in paper form and not electronically as correspondence under the SEC’s EDGAR system.

 S-3 Comment 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, 2005 and on June 6, 2005.

 The requested revision has been made to the section captioned
“Incorporation by Reference” on page 54 of the Form S-3.

 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).

 The requested revision has been made to the legality opinion of Davis Polk & Wardwell on page 1 of Exhibit 5.1.

 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.

 The Company appreciates the Staff’s reminder concerning Rule 5-03.1
and 2 of Regulation S-X and confirms that the amount of service revenue did not exceed 10% of total revenues in any period covered by the Form 10-K. The Company will breakout service revenue in future filings as appropriate.

 2005.06.17.2

 FOIA Confidential Treatment Request

 Pursuant to Rule 83 by Gateway, Inc.

 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.

 The $53 million inventory charge recorded in 2004 related to the closure of
the Company-owned stores and is included in the $86 million of restructuring, transformation and integration charges discussed on page 31 in the section of the Form 10-K captioned “Management’s Discussion and Analysis of Financial
Condition and Results of Operations”. Accordingly, the Company believes the $53 million charge was adequately discussed in the MD&A. As noted on the Conference Call, the additional reference within the paragraph regarding “the effect
of excess inventory sales at reduced margins stemming from the closure of our retail stores” relates primarily to other, incremental losses on the liquidation of certain store inventories as part of promotional or “fire” sales in the
days immediately prior to the store closures. These incremental losses were recorded outside of restructuring, transformation and integration charges and were not specifically quantified because such amounts were less than $10 million and thus did
not warrant additional disclosure.

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.

 Rebate levels increased from $12 million in
2003 to $105 million in 2004 primarily due to the addition of eMachines which relies on rebates and higher published unit prices as part of its pricing structure in its third party retail distribution model. During the second quarter of 2004, the
Company experienced a significant increase in rebate redemption levels which impacted second quarter margins as disclosed in the Company’s 2004 second quarter Form 10-Q; however, Retail segment (primarily eMachines) margins increased over the
last half of the year and generally held steady for the full year of 2004. This demonstrates that, amongst other things, the majority of the $93 million increase in rebates was recovered through increased unit sales prices. As unit sales prices and
rebates are interrelated and the net overall impact of the increased rebates offset by unit price increases was not material to the 2004 financials, the Company did not specifically quantify the related amounts. The Company did not experience
negative trends with respect to pricing/rebate levels for full year 2004 and through the first quarter of 2005. The Company will continue to monitor rebate levels and assess the adequacy of rebate-related disclosures in future filings, as
appropriate.

 2005.06.17.3

 FOIA Confidential Treatment Request

 Pursuant to Rule 83 by Gateway, Inc.

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.

 The Company considered the increase in rebate volume and historical return rates in preparing the Form 10-K and added
considerable disclosure to the section captioned “Management’s Discussion and Analysis of Financial Condition and Results of Operation – Critical Accounting Policies and Estimates”, in particular the third paragraph under
“—Revenue Recognition” on page 27. The Company believes this disclosure is adequate and reaffirms to the Staff that it did not experience any significant changes in estimates related to rebates or returns that led to significant or
material adjustments to the results of operations for the full year of 2004. The Company will continue to monitor and disclose going forward as appropriate.

 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.

 The Company acknowledges the Staff’s comment, appreciates its guidance and confirms that it will disclose such information in future filings as
appropriate.

 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.

 The Company respectfully submits that it has adequately disclosed the value of the 2.7 million shares repurchased, the nature of the credits applied
toward receivables owed by AOL to the Company and the accounting treatment thereof. The Company believes that readers can readily determine the value of the 2.7 million shares ($5.785 per share or $15.8 million) through review of Item 5, Issuer
Purchases of Equity Securities on page 23 of the Form 10-K and the balance sheet and statements of cash flows and stockholders’ equity which present new amounts and purchases of treasury stock. The Company

 2005.06.17.4

 FOIA Confidential Treatment Request

 Pursuant to Rule 83 by Gateway, Inc.

 believes that readers can sufficiently understand the nature of the $35.6 million applied against receivables owed from AOL based on the last paragraph of
Note 7 on page 65 of the Form 10-K and the supplemental disclosure of non-cash financing activities provided in Note 11 on page 68 of the Form 10-K. Finally, the Company respectfully draws the Staff’s attention to the disclosure in the last
paragraph of Note 7 on page 65 of the Form 10-K which discusses in detail the accounting applied in this transaction.

 In an effort to be responsive to Staff’s comment, the Company included additional disclosure in Note 1(q) of the March 31, 2005 Form 10-Q to clarify
that the 2.7 million shares of stock repurchased from AOL is included in treasury stock and will continue to provide such additional commentary in future filings as appropriate.

 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.

 The Company believes that it adequately addressed the reasons for the changes in its DSO and days inventory on hand in the first full paragraph at the top
of page 37 of the Form 10-K which discusses the increase in accounts receivable. As noted in note (a) to the table on page 36, and as discussed on the Conference Call, DSO is simply accounts receivable divided by net sales and accordingly a
discussion of accounts receivable subsumes a discussion of DSO. Furthermore, the Company does not expect such changes to have a material impact on future operations since, even though DSO increased from 22 days to 30 days, the amounts are still
current and no significant collection problems have been experienced through the first quarter of 2005. The Company does not believe these changes affected the quality or variability of earnings and did not have a material, adverse impact on
Gateway’s ability to meet its working capital and/or liquidity needs. Accordingly, the Company believes its Form 10-K disclosure is sufficient. Notwithstanding the foregoing, the Company did provide additional disclosure and commentary around
changes in its cash conversion cycle in the Form 10-Q in an effort to be responsive to the Staff’s comment and will continue to provide such additional commentary in future filings as appropriate.

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.

 2005.06.17.5

 FOIA Confidential Treatment Request

 Pursuant to Rule 83 by Gateway, Inc.

 The Company does not offer multiple element arrangements that include undelivered elements and, as a result, does not disclose an accounting policy
related to such activity. As noted in comment response 16 included in the Company’s letter to the Staff dated March 7, 2003, the Company offered multiple element arrangements consisting of a PC and 12 month internet service prior to late 1999;
however, the Company terminated this activity in 1999 and did not include this disclosure in its 2002 Form 10-K. Since then, the Company has not offered multiple element arrangements that include undelivered elements.

 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.

 The Company acknowledges the Staff’s comment and confirms that it will make the suggested disclosure to further define “non-recourse” in
future filings, as appropriate.

12.
We note your response regarding the $1.9 million exposures 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.

 We would like to
clarify for the Staff that the customers continue to make principal payments against the $1.9 million exposure.